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Medicare Trustees report shows continued slow cost growth

The Medicare Trustees projected that the trust fund that finances Medicare’s hospital insurance coverage will remain solvent until 2030, unchanged from last year, but with an improved long-term outlook from last year’s report. Under this year’s projection, the trust fund will remain solvent 13 years longer than the Trustees projected in 2009, before the passage of the Affordable Care Act.

“Growth in per-Medicare enrollee costs continues to be historically low even as the economy continues to rebound. While this is good news, we cannot be complacent as the number of Medicare beneficiaries continues to grow,” said Andy Slavitt, Acting Administrator of the Centers for Medicare & Medicaid Services (CMS). “That’s why we must continue to transform our health care system into one that delivers better care and spends our dollars in a smarter way for beneficiaries so Medicare can continue to meet the needs of our beneficiaries for the next 50 years and beyond.”

Per-enrollee Medicare spending growth has been low, averaging 1.3 percent over the last five years.  In 2014, Medicare expenditures were slightly lower for Part A and Part D, and higher for Part B than previously estimated. Over the next decade, and partially due to the cost-containment provisions in the Affordable Care Act, per-enrollee Medicare spending growth (4.2 percent) is expected to continue to be lower than the overall growth in overall health expenditures (5.1 percent).

In 2014, Medicare provided health insurance coverage to 53.8 million people. Total Medicare expenditures were $613 billion, and income was $599 billion. The average Medicare benefit per enrollee was $12,432, about 2 percent higher than last year. Medicare outlays in 2014 were slightly lower for Part A and Part D, and higher for Part B than previously estimated.

While Part B premiums will be finalized later this year, approximately 70 percent of beneficiaries are expected not to see a premium increase in 2016 because it is projected that there will be no cost-of-living increases in Social Security benefits. The remaining 30 percent of beneficiaries would pay a higher premium based on this projection. These include only individuals who enroll in Part B for the first time in 2016; enrollees who do not receive a Social Security benefit; beneficiaries that are directly billed for their Part B premium; and current enrollees who pay an income related higher premium. Decisions about premium changes will be made in October and depend on a variety of factors.

The Medicare Trustees are Health and Human Services Secretary Sylvia M. Burwell, Treasury Secretary and Managing Trustee Jacob Lew, Labor Secretary Thomas Perez, and Acting Social Security Commissioner Carolyn Colvin. Two other members are public representatives who are appointed by the President are Charles Blahous III and Robert Reischauer. CMS Acting Administrator Slavitt is designated as secretary of the board.

The report is available at http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/ReportsTrustFunds/index.html?redirect=/ReportsTrustFunds.   

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