Medicare to be insolvent 2 years earlier than previously expected

Medicare's hospital-insurance trust fund will be depleted by 2028, two years sooner than estimated in 2015, according to the annual report card by the program's trustees.

The trustees updated the estimate as a result of projected higher use of inpatient hospital services and lower taxable payroll.

Although the timeline for insolvency has been moved up, the trustees' estimate is still two years later than the Congressional Budget Office's prediction of 2026. CMS also highlighted that the trustees' updated insolvency date is 11 years longer than they projected before the passage of the Affordable Care Act in 2009.

"Per-enrollee Medicare spending growth has been low, averaging 1.4 percent over the last five years, slower than GDP per capita (2.9 percent) and overall health expenditures per capita (3.4 percent)," according to CMS.

As in past years, the trustees determined that the fund is not adequately funded for the next decade. Medicare spending is set to rise at a faster rate over the next 10 years due to enrollment growth driven by the aging of the U.S. population.

"The financial projections in this report indicate a need for substantial steps to address Medicare's remaining financial challenges" the trustees said in the report.

The trustees urged lawmakers to act on this issue quickly.

"The sooner solutions are enacted, the more flexible and gradual they can be. Moreover, the early introduction of reforms increases the time available for affected individuals and organizations — including healthcare providers, beneficiaries and taxpayers — to adjust their expectations and behavior," said the trustees in the report.

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