Good news for Medicare. The insurance program for Americans 65 and older is now expected to remain solvent until 2026, two years later than was estimated last year. The outlook for Social Security – fully solvent until 2033 – remained unchanged.
If the trust funds of Social Security and Medicare were exhausted, benefits would be cut – not stopped – because both programs are funded mainly through payroll taxes.
The improved outlook for Medicare was due in part to the cost controls resulting from the Affordable Care Act, the report said, and to lower projected hospital insurance spending.
“Thanks to the Affordable Care Act, we are taking important steps to improve the delivery of care for seniors with Medicare. These reforms aim to reduce spending while improving the quality of care, and are an important down payment on solving Medicare’s long term financial issues,” Marilyn Tavenner, Administrator of the Centers for Medicare & Medicaid Services, said in a statement.
Medicare spending per beneficiary has increased modestly – 1.7 percent annually from 2010 to 2012 – and is projected to continue to grow slowly over the next several years.
Slower spending increases will likely benefit beneficiaries. Although the Part B premium for 2014 will not be determined until November, the preliminary estimate in the report suggests that it will remain unchanged from the 2013 premium.
With reforms that improve care and eliminate waste, Medicare can drive positive change to benefit everyone throughout the entire health care system, AARP CEO Barry Rand wrote in a USA Today column.
The trustees report, which warned that both government programs face funding challenges, will likely influence debate over the future of entitlement programs as well as measures to cut the deficit.
“With their report today, the Social Security Trustees draw renewed attention to the long-term financial challenges facing this vital retirement security program. While not in crisis, Social Security will require modest changes to ensure current and future generations will receive the benefits they’ve earned,” AARP Executive Vice President Nancy LeaMond said in a statement.
Medicare covers about 50 million people, 42 million aged 65 and older, and about 8 million people with disabilities.
About 57 million people collect Social Security benefits.
Also of Interest
- Improving Care, Reducing Costs in Medicare
- The Walk to Walden’s Woodshed and Other Contradictions in the Obama Budget
- Join AARP: Savings, resources and news for your well-being
See the AARP home page for deals, savings tips, trivia and more
Photo: Robert Kirk/Istockphoto