Lower Medicare Spending Means Enhanced Financial Future
- By BSTQ Staff
According to the 2014 annual report from the Medicare program’s boards of trustees, a substantial decrease in Medicare spending as a result of improvements made by the Affordable Care Act (ACA) will result in the Medicare Trust Fund lasting until 2030, as well as no increase in projected Part B premiums for 2015. The ACA improvements include changes to promote value-based payments, reduce waste and fraud and strengthen the program’s benefits, which have reduced hospital spending on preventable readmissions, helping to lower hospital costs — a significant portion of trust fund spending.
The per capita growth rate for Medicare spending over the 2009 through 2012 period was just one-third of its rate over the 2000 through 2008 period, falling from 6.3 percent per person to 2 percent per person. In 2013, that rate fell to nearly zero, and so far in fiscal year 2014, growth in per person Medicare spending is at or below zero. The dramatic decline in spending has generated $116 billion in savings over the four years from 2009 to 2012.
In 2009, the trustees projected the trust fund would not be able to pay its bills in 2017. But, it will now last an additional 13 years, until 2030. The actuarial imbalance, which measures the gap between the trust fund’s income and expenditures over the next 75 years, is just 0.87 percent of taxable payroll, down by more than 75 percent since 2009, before the passage of the ACA.
And, lower Medicare spending means lower cost sharing and lower premiums for Medicare beneficiaries. For the second year in a row, Medicare Part B premiums are projected to stay the same in 2015 as in 2013 and 2014. This means seniors are expected to keep more of their annual Social Security cost-of-living adjustment.
