Last week, Medicare's Trustees released their annual report on the health entitlement's finances. The news wasn't good: Unfunded liabilities have grown since last year, and the program's hospital trust fund, estimated last year to expire in 2029, is now expected to expire in 2024.
Yet if anything the report was far too optimistic in its assessment. In a note buried at the end of the report, Richard Foster, Medicare's chief actuary, warns readers that the long-range estimates shouldn't be believed:
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….
For these reasons, the financial projections shown in this report for Medicare do not represent a reasonable expectation for actual program operations in either the short range (as a result of the unsustainable reductions in physician payment rates) or the long range (because of the strong likelihood that the statutory reductions in price updates for most categories of Medicare provider services will not be viable).
(Thanks to Jim Capretta for the pointer.)