The report presented a significant win for hospitals, yet illustrates where more funding is needed.
The Medicare Trustees Report shows that the Hospital Insurance Trust Fund is in better shape than we previously thought. According to the report the program will be able to pay all scheduled benefits until 2036 - seven years later than what was reported in 2023.
All parts of Medicare are expected to grow over the next couple of decades, and reforms will be needed to ensure a slowing of that growth and build revenue for the trust fund.
Although the report did cite some greater financial issues, the Biden Administration seems pleased with the results, seeing it as a correlation of the administration’s focus on economic and healthcare policies such as the Inflation Reduction Act.
The upswing of the Hospital Insurance Trust Fund is attributed to a policy change of how medical education costs are calculated for Medicare Advantage rates in 2024. The result is greater payroll tax income from an economy that performed better than economists had expected, as well as lower 2023 costs for inpatient hospital and home health agency services.
“The Biden-Harris Administration has left no stone unturned in our efforts to strengthen and preserve Medicare, not just for our parents and grandparents but for our children and generations to come,” said Department of Health and Human Services Secretary Xavier Becerra in a statement. “We will continue this work by negotiating the cost of prescription drugs, ensuring no one with Medicare goes bankrupt paying for lifesaving prescription drugs.”
Physician Payments
One major problem that is still lurking is physicians payments, the report citing that trustees expect “access to Medicare-participating physicians to become a significant issue in the long term.”
Many groups agreed, including lawmakers from the Medicare Payment Advisory Commission (MedPAC) and Jesse Ehrenfeld, M.D., president of the American Medical Association.
“This report continues the drumbeat of recommendations that all point out that the payment system is failing patients and physicians," Ehrenfeld said in a statement. "It would be political malpractice for Congress to sit on its hands and not respond to this report."
Physician payments have decreased roughly 30% since 2001, a major problem for underserved providers.
While MedPac agreed that physician payments should be higher, its report that was released in March capped its inflationary update at 50% of the Medicare Economic Index for physician services in 2025. Many groups such as AMA and AHIP slammed the organization for not doing enough to address the issue.
The added years to the Hospital Insurance Trust Fund are a significant improvement, but there is still much work to be done in terms of long-term stability in the healthcare industry. The report suggests two potential solutions: raising the payroll tax from 2.9% to 3.25% or reducing expenses by 8%.
We will have to check back on this issue to see which, if any, solutions will play out.
Marie DeFreitas is the finance editor for HealthLeaders.
KEY TAKEAWAYS
The Hospital Insurance Trust Fund had added seven years to its “go-broke” date
Physician payments have steadily decreased over the last twenty years and still remains a large issue
There is still much work to be done to ensure long-term stability of the Medicare landscape