Last week the Social Security and Medicare Boards of Trustees released reports on the fiscal health and solvency of the Medicare and Social Security programs. The most notable finding from this year’s Medicare Trustees report is that the Hospital Insurance (HI) Trust Fund which funds Medicare Part A will be able to pay 100% of benefits until 2036, which is five years longer than last year’s report predicted. The report continued that, under the current forecasts, the program would then in 2036 be able to pay out 89% of total scheduled benefits barring no changes in funding the HI Trust Fund. 

Avoiding HI Trust Fund Insolvency has been a primary motivation for federal health policy to focus on reducing Medicare spending. The new projected insolvency date provides additional breathing room. Nonetheless, having a date on the horizon will undoubtedly make it more difficult to increase Medicare spending in any way. 

For example, it will continue to be difficult to pass policies that increase Medicare spending such as expanding Medicare coverage for telehealth or providing inflationary adjustments to the Medicare Physician Fee Schedule (PFS) Conversion Factor (CF). Contrarily, policies that decrease Medicare spending such as value-based care programs and site-neutral payments will continue to be attractive to policymakers. 

Medicare Part B is financed separately from the HI Trust Fund. Medicare Part B is funded by the Supplemental Medical Insurance (SMI) Trust Fund which is sufficiently funded for the indefinite future since the program is covered by patient premiums and associated federal contributions from the treasury. The Trustees Report assesses that Part B financing is stable in both the short and long term. 

ADVOCATE will share additional information with clients and friends as it becomes available on this and other Federal Health Policies.  


Kirk Reinitz, President