Medicare trust fund shows progress, has enough cash for 15 more years, CMS says

The Medicare Trust fund's solvency is a sign that reforms are working but also a call for action, according to federal health leaders.

The Medicare Trust fund is slated to last at least another 15 years, a sign that reforms are working but also a call for action, according to federal health leaders.

In their annual report, the Medicare Trustees are projecting that the program's trust fund for hospital insurance coverage will remain solvent until 2030, unchanged from last year, and 13 years longer than the Trustees projected in 2009, before the passage of the Affordable Care Act.

"Growth in per-Medicare enrollee costs continues to be historically low even as the economy continues to rebound," said Andy Slavitt, acting administrator of the Centers for Medicare & Medicaid Services.

"While this is good news, we cannot be complacent as the number of Medicare beneficiaries continues to grow. That's why we must continue to transform our healthcare system into one that delivers better care and spends our dollars in a smarter way for beneficiaries so Medicare can continue to meet the needs of our beneficiaries for the next 50 years and beyond."

On a per-enrollee basis, Medicare spending growth has been lower, averaging 1.3 percent since 2010, even amid the baby boomer retirement wave, as Slavitt noted.

In 2014, Medicare covered to 53.8 million Americans, with total expenditures of $613 billion on income (in premiums and payroll taxes) of $599 billion. The average Medicare benefit per enrollee was $12,432, about 2 percent higher than last year. Medicare spending was also slightly lower for Part A hospital coverage and the Part D drug program, while higher for the Part B physician benefit than previously estimated.

"Over the next decade, and partially due to the cost-containment provisions in the Affordable Care Act, per-enrollee Medicare spending growth (4.2 percent) is expected to continue to be lower than the overall growth in overall health expenditures (5.1 percent)," CMS said in a statement.

While Medicare Part B premiums won't be finalized until later this year, approximately 70 percent of beneficiaries are expected not to see a premium increase in 2016 because there likely won't be cost-of-living increases in Social Security benefits, the agency said.

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Annual spending on Medicare beneficiaries grew by 5.9 percent on average from 2000 to 2008, before coming down after the Great Recession and the passage of the ACA.

At the current rate of payroll tax collections, enrollment and spending, by 2030 Medicare would be able to pay about 86 percent of costs (or 80 percent by 2050), according to the Medicare Trustees report.

Medicare trustees still have some skepticism about the long-term success of new ACA payment reforms.

"The ability of new delivery and payment methods to lower cost growth rates is uncertain at this time," wrote the board of trustees. "Preliminary indications are that some of these delivery reforms have had modest levels of success in lowering costs. It is too early to tell if these reductions in spending will continue or if they will grow to the magnitude needed to align with the statutory Medicare price updates. Given the se uncertainties , it  ill be important for policy makers to monitor the adequacy of Medicare payment rates over time to ensure beneficiary access to high-quality care."

The Social Security program, meanwhile, has a longer solvency period in total, but some short-term problems as well.

Unless Congress acts to make changes, those who depend on Social Security's disability benefits program could suffer from a 19 percent automatic cut if the sub-fund runs out, which is expected to happen next year.

The non-disability retirement fund is solvent through 2035, according to the report, although one potential fix for the disability fund could diminish the retirement fund's long-term coffers: transferring money from the retirement to the disability fund.

Twitter: @AnthonyBrino