A recent report shows that Medicare may be on the mend. The financial outlook for Medicare has improved because of a stronger economy and slower growth in health spending, according to a report by the Medicare Trustees.
The Medicare trustees — four federal officials and two public representatives — said in their annual report that the “modest improvement” in the outlook for Medicare’s long-term finances reflected lower projected spending for skilled nursing homes and private Medicare Advantage plans.
The administration said the outlook for the Medicare trust fund was brighter because of the 2010 health care law. The law squeezed nearly $500 billion out of Medicare over 10 years, in part by trimming payments to many health care providers, but the number of Medicare beneficiaries will grow rapidly, to 73 million in 2025 from 52 million today, so paying for the program remains a huge challenge, administration officials said.
Older Americans stand to benefit from the slower growth in health spending. The standard Medicare premium paid by most beneficiaries will probably stay at the current level, $104.90 a month, next year, the trustees said in their report.
Under current law, the administration said, Medicare’s hospital insurance trust fund will be exhausted in 2026, and the Social Security Trust Fund will be depleted in 2033. The administration said in its 2012 report that the Medicare trust fund would run out of money in 2024, and the Social Security fund in 2033.
Social Security provides benefits to more than 57 million people, and an average of about 10,000 baby boomers become eligible each day. Payroll taxes and other revenue dedicated to Social Security would be sufficient to pay about three-fourths of promised benefits when its trust fund runs out, administration officials said.