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MEDICARE SOLVENCY: A CONTINUING CHALLENGE UPDATE

April 24, 2012 | No Comments
Posted by Frank Ciesla

The Medicare Board of Trustees the same as last year, projected that the Medicare program will be insolvent in 2024.  Unfortunately, just as last year, the news may be even worse than that.  If you read pages 277-279 of the Trustee’s report which is the Actuarial Opinion, there are two (2) critical assumptions being made by the Trustees in order for the Medicare Trust Fund to remain solvent until 2024.  The first assumption is that the proposed cut in physician payments (effective January 1, 2013) of approximately 30.9% will go into effect, and the second assumption is that additional reductions in payments to other providers, presently provided for in the Patient Protection and Affordable Care Act (PPACA), will be implemented.  As the Actuary similarly stated last year and repeated this year states:

“Without unprecedented changes in health care delivery systems and payment mechanisms, the prices paid by Medicare for health services are very likely to fall increasingly short of the costs of providing these services.  By the end of the long-range projection period, Medicare prices for hospital, skilled nursing facility, home health, hospice, ambulatory surgical center, diagnostic laboratory, and many other services would be less than half of their level under the prior law.  Medicare prices would be considerably below the current relative level of Medicaid prices, which have already led to access problems for Medicaid enrollees, and far below the levels paid by private health insurance.  Well before that point, Congress would have to intervene to prevent the withdrawal of providers from the Medicare market and the severe problems with beneficiary access to care that would result.  Overriding the productivity adjustments, as Congress has done repeatedly in the case of physician payment rates, would lead to substantially higher costs for Medicare in the long range than those projected under current law.”

As I stated last year regrettably, as can be seen by the Actuarial statement, radical changes will have to be undertaken to maintain the solvency of the Medicare program, and the question is whether those changes will be at the expense of the providers.

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