A May 31, 2013 report from the Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds projects that the Medicare Hospital Insurance Trust Fund will remain solvent through FY 2026, two years longer than the Trustees’ report projected last year.  The report noted that lower Medicare Advantage plan bids and reduced use of skilled nursing facilities contributed to the improved outlook, and projected continued cost reductions as provisions in the Affordable Care Act, such as continued productivity adjustments to market basket updates, take effect.  However, the report projects that the Trust Fund costs will begin exceeding revenues by 2021.  The report also states that the Supplementary Medical Insurance (SMI) Trust Fund, which provides Parts B and D payments, remains on unstable financial footing – even assuming that Congress does not intervene to once again delay cuts to physician payments under the Medicare Sustainable Growth Rate.  The report estimates that costs for the SMI Trust Fund are expected to rise from 2 percent of GDP in 2012 to 3.3 percent in 2035.

The report is available here.

Reporter, Christopher Kenny, Washington, D.C., + 1 202 626 9253, ckenny@kslaw.com.