5 Points Hospitals Should Know About the 2013 Medicare Trustees Report

Every year, the Medicare Trustees release a report that projects financial operations of the Hospital Insurance Trust Fund, or Medicare Part A, as well as the Supplementary Medical Insurance Fund, which consists of Medicare Part B and Part D.

This year, the Medicare Trustees — which include HHS Secretary Kathleen Sebelius and U.S. Secretary of the Treasury Jack Lew, among others — unveiled more positive news compared with past years. Here are five points from the trustees' report that hospital executives and healthcare professionals should know.

1. Medicare's hospital funds have become more solvent. Medicare's HI Trust Fund is expected to be depleted in 2026, which is two years later than last year's estimate. In addition, Medicare's long-term deficit, over the next 75 years, was reduced. The group said Medicare's improved outlook was due to several reasons, such as lower-than-expected hospital and skilled nursing facility spending, reduced Medicare Advantage costs and generally slow levels of healthcare spending growth.

2. Medicare's assets decreased from 2011. At the end of 2012, Medicare recorded total assets of $287.6 billion, down from $324.9 billion at the end of 2011. The HI Trust Fund's assets represented $220.4 billion of that total. Within the SMI Fund, Part B had $66.2 billion in assets, while Part D had $1 billion in assets.

The HI Trust Fund is mostly funded through the payroll tax, while the SMI Trust Fund receives most of its funding through the Treasury.

3. HI Trust Fund expenditures have exceeded income and taxes every year since 2008.
In 2007, Medicare's HI Trust Fund had $326 billion in its coffers, gaining $20.7 billion in that year alone. In 2008, and every year since, Medicare's hospital trust has spent more than the revenue it brought in. A variety of factors have led to this shift, such as a rapidly aging population eligible for Medicare benefits and overpayments to private Medicare Advantage insurers.

4. The Medicare program spent an average of $12,103 per beneficiary in 2012. Last year, Medicare expenditures averaged $5,227 for Part A, $5,097 for Part B and $1,779 for Part D for each beneficiary, or $12,103 total. That's a 0.7 percent increase from 2011. Part D costs for beneficiaries kept the figure in check, as the Patient Protection and Affordable Care Act will gradually close the prescription drug doughnut hole.

5. Medicare spending could reach 9.8 percent of gross domestic product in 2087. In 2012, Medicare's total expenditures were $574 billion, or 3.6 percent of the country's GDP. The trustees said under current law, Medicare spending is expected to grow to 6.5 percent of GDP by 2087, and that figure could balloon to 9.8 percent of GDP if Congress continues to neglect ways to fix the sustainable growth rate and if legislators fail to reduce price increases.

"Growth of this magnitude, if realized, would substantially increase the strain on the nation's workers, the economy, Medicare beneficiaries and the federal budget," the trustees wrote.

More Articles on Hospitals and Medicare:

Medicare Trustees: Hospital Funds Improve, Now Solvent Through 2026
Almost All Hospitals Receive Medicare Pay Adjustments, GAO Says
CMS Proposes Medicare Reforms to Save Hospitals $676M Per Year

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