What the Medicare Part A belly date means to you


At its current pace, the Medicare Hospital Insurance Trust Fund will run out of money in 2028, according to the June 2022 Medicare Trustees Report. That’s a two-year extension from the previous estimate. , but experts say it’s still not good news and the government needs to stop twiddling its thumbs. Here’s what you need to know.

If the Medicare Hospital Insurance trust fund is depleted, that doesn’t mean Medicare Part A will implode. But the program will not have enough revenue to cover all operating costs, with a revenue shortfall of around 10% from 2029.

“This part of the Medicare program will not be able to make payments to health care providers and health insurers that are due, and those payments will be increasingly delayed over time,” says Matthew Fiedler, principal investigator at USC. -Brookings Schaeffer. Health Policy Initiative.

This backlog could result in a significant financial shock for hospitals that rely on Medicare revenue to operate. Ultimately, says Fiedler, “hospitals might rethink the extent to which they want to participate in Medicare.”

It’s important to understand that the Medicare Hospital Insurance Trust Fund does not fund all of Medicare — it funds Medicare Part A, or Hospital Insurance. Medicare Part B, which covers doctor’s appointments and outpatient care, and Medicare Part D, which covers prescription drugs, are primarily funded by patient premiums and general government revenue.

The government could handle the situation in a number of ways, ranging from adjusting service coverage to redirecting revenue. Here are some options:

Change department

Some experts have suggested the government could move some post-acute services – such as physiotherapy or nursing care management after a hospital stay – from Part A to Part B.

“It makes the Part A trust fund look better because you’ve taken some expenses off the books,” says Dr. Mark McClellan, Robert J. Margolis Professor of Business, Medicine, and Politics at the University. Duke, who holds a doctorate in economics. “But that doesn’t really change the overall cost or sustainability of the program.”

For Medicare beneficiaries, this change could mean that certain post-acute services that are 100% covered under Part A could be subject to the Part B deductible and 20% coinsurance, unless the beneficiary does not have a Medigap or Medicare Advantage plan that covers certain costs.

Modernize

When Medicare Part D was introduced in 2006, there weren’t as many expensive specialty drugs on the market. Today, the government pays the majority of the catastrophic drug bill. Reducing drug costs and applying those savings to the Part A trust fund is one option. Current legislation in Congress would help Medicare beneficiaries spend less on prescription drugs and lower the costs of some expensive drugs over time.

“The Senate bill includes a significant modernization of Medicare drug coverage, to provide more comprehensive coverage for Medicare beneficiaries with high drug costs and to bring Medicare drug plans to negotiate more aggressively with drugmakers,” McClellan said.

Reduce payments

In the short term, the government could reduce Medicare payments to some or all Part A providers, said Joseph Antos, senior fellow and Wilson H. Taylor health care and retirement policy fellow at the American Enterprise Institute.

“Congress has done it before and can do it again, especially if it comes with another adjustment that takes effect in the ninth or tenth year to return the money,” Antos said in an email. (The Congressional Budget Office makes 10-year cost estimates, so a nine- or 10-year adjustment schedule “maximizes substantial savings but signals to vendors that the reduction would be temporary,” Antos said.)

For beneficiaries, the impact of this approach would be minimal, though it could reduce access to some providers or lead some providers to add services that aren’t covered by Medicare to increase revenue, Antos said.

Move funds

The most likely option is for the government to authorize a one-time injection of general funds into the Medicare trust fund. “I could easily see how they would say, ‘For a temporary basis, for five years, we will allow an infusion of general revenue to supplement it,'” Antos said.

If that happens, he said, the country’s debt will continue to rise. “It wouldn’t impact the beneficiaries,” Antos said. “It would have an impact on their children.”

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