Medicare has funding through 2028, trustees say, 2 years less than earlier thought

The trust fund financing Medicare's hospital insurance coverage will remain fully funded until 2028, a solvency date two years shorter than what was predicted last July and in 2014.

However, Medicare Trustees said the 2028 date is 11 years longer than they projected in 2009 before the passage of the Affordable Care Act.

In July 2015 and in 2014, trustees projected the trust fund would remain solvent until 2030.

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Drug prices, especially among specialty drugs, are projected to help push total Medicare spending to a 6.9 percent average annual rate, according to the Centers for Medicare and Medicaid Services.

The cost of prescription drugs paid by Medicare continues to exceed growth in other Medicare costs and overall health expenditures, CMS said. 

Over the next decade, an aging baby boomer population and higher drug costs will push Medicare Part D expenditures per enrollee to increase by an average of 5.8 percent annually through 2025, a rate that is higher than the combined per-enrollee growth rate for Medicare Part A and B, which is 4 percent, CMS said.

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Overall per-enrollee Medicare cost growth remains low at 1.4 percent over the last five years. That rate is slower than overall health expenditures per capita of 3.4 percent, CMS said.

"Per-Medicare beneficiary cost growth continues to be exceptionally low," said Andy Slavitt, CMS acting administrator.

In a report to Congress on June 16, the Medicare Payment Advisory Commission gave recommendations on improving Medicare Part D, which made up about 57 percent of the $112 billion Medicare spent on drugs in 2013.

Medicare spending for drugs and pharmacy services made up 19 percent of the $574 billion program total in 2013, MedPAC said.

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Medicare's portion of retail drug spending continues to rise, from 2 percent when the Part D program began, to 13 percent in 2013. By 2024, Medicare's share will reach 34 percent, MedPAC said.

MedPAC recommends giving drug plan sponsors greater financial incentives to manage enrollees' benefits and stronger tools to do that. Commissioners recommend excluding manufacturer discounts on brand-name drugs from counting as enrollees' true out-of-pocket spending. And it wants greater insurance protection by eliminating beneficiary cost sharing above the catastrophic cap.

MedPAC recommendations would also allow plans to send greater price signals to low-income beneficiaries to use generic drugs.

For consumers, Medicare spending will result in a small increase in Part B premiums for about 70 percent of Medicare beneficiaries, according to projections based on preliminary data.

Based on early data showing the potential for a small Social Security cost of living adjustment, the Trustees Report projects that Medicare's "hold harmless" protection will be triggered again this year.

A final Social Security cost of living adjustment will be announced in the fall based on updated data. The 2017 Medicare Part B premiums, which typically differs from these projections, will be announced later in the year, CMS said.

The Medicare Trustees are: Health and Human Services Secretary, Sylvia M. Burwell; Treasury Secretary and Managing Trustee, Jacob Lew; Labor Secretary, Thomas Perez; and Acting Social Security Commissioner, Carolyn Colvin. Slavitt is the secretary of the board.

Twitter: @SusanJMorse