Entitlements: Medicare’s latest annual report, issued days before its 50th anniversary, seems to show that, thanks to ObamaCare, it has a long and healthy future in front of it. But it’s not true. Not by a long shot.
President Obama’s top economists, Jeff Zients and Jason Furman, claim that the new Medicare Trustees Report “confirms the major progress that has been made in recent years in improving the financial position of the Medicare program.”
Medicare’s Hospital Insurance Trust Fund will remain solvent until 2030, they say, which is 13 years longer than it was before ObamaCare. Plus, they say, growth in per-beneficiary spending was just 2.3% last year, “less than one-half of the 5.5 average rate from 2000 to 2010.”
But this sunny outlook doesn’t stand up to even the slightest scrutiny.
Medicare is still a fiscal time bomb. As the nearby chart shows, its hospital insurance deficits will hit $110 billion in 2031 — the first year after its trust fund runs out of money. Annual deficits will eventually top $1 trillion a year.
Even that is a fantasy, since it assumes ObamaCare’s steep Medicare provider payment cuts actually happen. Even Medicare’s trustees are skeptical.
Buried in an appendix, the report admits that “there is substantial uncertainty” regarding the likelihood that those cuts will be feasible.
They are so deep, the report says, that what Medicare pays will “fall increasingly below providers’ costs.” By 2019, for example, as many as 15% of hospitals will have negative Medicare margins, it says. And the only way to avoid such massive losses would be for doctors and hospitals to “generate and sustain unprecedented levels of productivity gains.”
Washington has already shown that it won’t swallow such Medicare cuts. Soon after a 1997 payment cut plan — called “Sustainable Growth Rate” — went into effect, Congress repeatedly nullified it. In the likely event that Congress cancels the ObamaCare-imposed cuts, then “the actual future costs for Medicare may exceed the projections shown in this report, possibly by substantial amounts,” the trustees say.
Medicare remains in financial jeopardy and is in need of serious reform. Any politician who pretends otherwise is doing taxpayers and retirees a huge disservice. (IBD)