Medicare’s main trust fund will run dry by 2028, two years earlier than previous estimates, according to a review released Wednesday by the Obama administration.
The Social Security trust fund will run dry by 2034, the same as expected last year.
Both programs, which made up about 40 percent of federal spending in 2015, face major solvency concerns in the next two decades, officials warned Wednesday.
“Medicare faces a substantial, long-term shortfall that needs to be addressed,” Treasury Secretary Jack Lew told reporters.
The long-term financial picture for Medicare is worsening despite a spate of government actions to reduce healthcare costs systemwide.
Andy Slavitt, acting head of the Centers for Medicare and Medicaid Services, underscored the role ObamaCare has played in helping to slow down overall healthcare costs.
“Some of this reduction in Medicare spending is the direct result of payment reforms in Affordable Care Act,” Slavitt told reporters.
But the long-term effects of those payment and delivery reforms will not be enough to cover the major increases in people enrolling in Medicare and the rising costs of their care.
The government’s trustees for Medicare and Social Security outlined their grim outlook for the programs as part of an annual review released Wednesday. The full analysis is more than 500 pages.
Still, the report reveals some positive trends in healthcare spending, including a slower growth in the program’s per-enrollee spending.
And overall, the Mediare trust fund is expected to last 11 years longer than projected before ObamaCare.
AARP voiced support for more action, such as reducing drug costs and eliminating unneeded testing and paperwork.
“We can and must continue to find ways to improve care and reduce unnecessary costs in Medicare using sensible solutions that do not harm beneficiaries,” AARP wrote in a statement.
Officials said the projections for Medicare already take into account a “substantial reduction” in year-over-year healthcare costs, partly due to the administration’s focus on delivery system reforms and changes to provider payments. The administration’s projections do not account for the most recent changes to improve Medicare, including the massive payment law known as Medicare Access and CHIP Reauthorization Act of 2015.
Over the long term, the administration warns that the “availability and quality” of healthcare under Medicare could become less than those insured by private health plans.
Republicans, like Senate Finance Committee Chairman Orrin Hatch (R-Utah), used the dismal long-term projections to criticize what he described as inaction by the Obama administration.
“Today’s reports are a stark reminder about the significant financial challenges facing our entitlement programs and demonstrate how little has changed to improve and reform Medicare and Social Security’s retirement program under the Obama Administration,” Hatch wrote in a statement.
One of the biggest healthcare concerns about the 2015 report did not come to fruition, however.
Some health experts warned this year’s report could spur ObamaCare’s controversial cost-cutting panel – the Independent Payment Advisory Board, or IPAB – into action for the first time.
Written by Sarah Ferris