Kusserow on Compliance: Trustees forecast Medicare hospital trust fund solvent until 2029

The hospital trust fund forecast for Medicare’s hospital insurance trust fund found improvement in the past year due to health costs rising more slowly than expected and predictions that enrollees will use hospital services less often. The trust fund would last through 2029, one year later than what was projected last year. As in past years, the Trustees have determined that the fund is not adequately financed over the next 10 years. They projected modest surpluses to continue in 2017 through 2022, with a return to deficits thereafter until the trust fund becomes depleted in 2029. HHS Secretary Tom Price, one of four Medicare trustees, also said the hospital trust fund forecast was secure enough that it would not trigger a Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) provision to make automatic cuts to the program. Those cuts are required by the ACA when spending is expected to exceed certain benchmarks. Despite the slightly improved outlook, the trustees warned that the aging of the baby boom population and rising health care costs will cause Medicare expenses to increase and deplete the trust funds.

The report noted that in 2016, Medicare covered 56.8 million people. About one third of these beneficiaries have chosen to enroll in Part C private health plans that contract with Medicare to provide Part A and Part B health services. Total expenditures in 2016 were $678.7 billion, and total income was $710.2 billion, which consisted of $700.4 billion in non-interest income and $9.8 billion in interest earnings. Assets held in special issue U.S. Treasury securities increased by $31.5 billion to $294.7 billion


Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of
Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC
, provides a wide range of compliance tools including sanction-screening.

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