Medicare's Chief Actuary: Don't Trust the Medicare Trustees


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.) 

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  1. Somebody explain to me how Medicare is not considered broke now. The way I see it, we have a 1.6 trillion-dollar deficit and a 14 trillion-dollar debt. That means that the whole government, Medicare included, is "broke". Any fanciful visions about trust funds and operating revenues are just that: fancy.

    1. LOCKED BOX!!!

    2. Once upon a time, Enron and GM had large market capitalizations. But if one read and could understand the footnotes in their financial statements, it was obvious that each was likely to fail.

      Ditto Medicare and Social Security, it would seem.

    3. I think the debt would actually be bigger if the government wasn't hiding it with the social security "trust" fund money they haven't spent yet.

      There is no way I'm getting social security. Boo hoo.

  2. You people are ridiculous.
    Government does a lot for us!

    -Labour standards
    -Education system
    -Protection of human rights
    -Physical infrastructure
    -Programs to assist the most vulnerable
    -Marketplace regulation aimed at protecting consumers and investors
    -Health insurance available to all
    -Protection of the natural environment
    -Planning for future social needs

    1. Apparently, Dominique Strauss-Kahn has access to a computer in his jail cell.

      1. His new name is Pepe Re Peu


      Sacre Spew!

      1. Latrine!

        1. Merde?

          1. How do we know he's NOT Mel Torme?

            1. Because his biggest fan isn't Harry Anderson?

              1. Yes, I believe that would work.

    3. Protection of the natural environment

      Can you define the term made of those last two words? It has no meaning to me.

      1. Beavers build natural dams.
        Humans build artificial dams.

        Is that clear?

        1. So, wait, do humans make artificial Serpent Mounds or natural Serpent Mounds?

          1. That would be a snake in the grass, would it not? Is it Astrturf? There's your answer.

    4. You left out stealing, raping, and murdering.

  3. Mr. Foster could have saved himself some typing by simply labeling the entire thing a work of fiction.

  4. also you might want to add in that these projections assume a return back to full economic output by then. If another recession occurs before 2024, which is likely, the numbers are going to look much worse.

  5. I'd take him much more seriously if he would gyrate from side to side flailing his hands in the air, yelling, "Danger Will Robinson!"

    1. Which works well considering that H & R commenting reminds me so much of a MST3000

      1. "Dear Counselor Troi, I waited for you at the Denny's but you didn't meet me."

        Also: "Denny's is for winners."

      2. We're a combination of that and of Calvin's dad.

      3. I often think of H&R as South Park acted out by computer nerds.

        But I could agree with MST3000 as well.

        1. And Calvin's dad. You know, when he's explaining things wrong to Calvin on purpose. There's a lot of that here.

          1. I got the complete collection of Calvin and Hobbes a few years ago as a gift. My all time favorite is still the one where his dad is explaining why old pictures are black and white.

            1. That's a great one. I got that set for my 40th birthday.

            2. Here's a page with Calvin's dad explanations of the world.

        2. ...as is tradition.

          1. What an awful episode. Season 15 has generally been a bust so far. How I pine for the age of "Lil Crime Stoppers" and "A.W.E.S.O.M.-O."

            1. AWESOM-O was...awesome. I love that episode.

  6. I'm shocked to find gambling going on in this establishment.

  7. Holy crap! Those are their assumptions?

    My questions are:

    (1) How much of Medicare's annual outlay is covered by Medicare taxes? If the outlay exceeds the taxes now, when does that stop (projecting current expenses and trends forward)?

    (2) Projecting current expenses and trends forward, when does this mythical trust fund run out?

  8. Medicare's Chief Actuary: Don't Trust the Medicare Trustees

    WTF? The word "trust" is right there in their name. I'm getting used to it, though. For instance this morning I opened a box of Grape Nuts - no grapes, no nuts! Again, WTF?

    1. Yeah! My Cheerios weren't very happy when I opened the box, either.


      WTF indeed.

    2. You know, I had you pegged as more of a Lucky Charms kind of guy.

      1. Which cereal is neither lucky nor charming. I think sage is on to something here.

        Though Frosted Flakes are, in fact, flakes that are frosted.

        1. You're just still bitter that Smurf Berry Crunch had no Smurfs in it.

          1. I don't eat communist cereals, thank you very much.

            1. Your link is to a page which has those double-underlined links that bring up an advertisement when you hover over them. Total fail.

              (Seriously, I find that sort of link so obnoxious that I avoid sites with them on principle.)

        2. I refuse to continue to perpetuate the stereotyping of the Irish, which is why I refuse to both see Riverdance or eat Lucky Charms.

      2. I wasn't opening the box to eat it, dude. I was loading it in my shotgun. That way I don't have to worry about picking the pellets out of my neighbor's cat before I eat it.

  9. Name one program other than defense that the government has run successfully. Medicare has ponzy written all over it.

    1. -Labour standards
      -Education system
      -Protection of human rights
      -Physical infrastructure
      -Programs to assist the most vulnerable
      -Marketplace regulation aimed at protecting consumers and investors
      -Planning for future social needs

      1. No, Sacre Bleu, she said successfully.

        1. none of the above has been done without the government now was it?

      2. This is reason.com. Do you seriously think that repeating your inaccurate statements about government doing a good job is going to magically convince us that statism = good while freedom = bad?

    2. Isn't "defense" the sort of thing that the government runs "successfully" just by comparing it to every thing else it does? It is also a fairly... simple... task, and is, at least, a numerated power.

  10. HA! HA! HA! HA! I LOVE IT! The boomers will tax the bejesus out of me to pay for their medicare, mortgage my and my childrens future(to people who point nukes at my zip code) to pay for it and bankrupt the West to boot. Go HIPPIES! Somethin for nothin! YEAH!

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