October 30, 2014

Good News in Medicare Report Isn't As Good As It Sounds

  • The federal budget is an expression of our country's values. Where we choose to spend and at what levels, how and who we tax, and the borrowing we...

Good news comes and goes rather quickly in the  2010 Medicare Trustees’ Report, says Concord Executive Director Bob Bixby. The report begins by saying that this year’s health reform bill substantially improved Medicare’s finances. But it also warns that future Medicare expenditures “are likely to exceed the intermediate projections shown in this report, possibly by quite large amounts.”

In a blog posting today, Bixby says the trustees' report as a whole should be viewed as “yet another wake-up call as to how much more needs to be done.” As the trustees themselves warn, “The financial projections in this report indicate a need for additional steps to address Medicare’s remaining financial challenges.”

Even with the assumed improvements from health care reform, Medicare will still claim increasing amounts of general revenues in the future, putting a growing strain on the rest of the federal budget. Most of the health care bill’s Medicare savings and added payroll tax income have been dedicated to an expansion of Medicaid and to subsidies to help some people buy health insurance. Key assumptions in the official Medicare projections that involve physician payments as well as payments to non-physician providers are also problematic.

So the policymakers who are now trumpeting the “good news” in the trustees report, Bixby says, must accept the responsibility to show the budgetary discipline that will be required if certain optimistic assumptions don’t hold up. “The temptation,” he says, “will always be to not do so, but that is the path to fiscal ruin.”