Upbeat Medicare Solvency Report Quickly Finds Doubters

The new health law will buttress Medicare for a dozen more years than previously expected, according a report issued Thursday by the program's trustees, The Washington Post reports. But, "[t]he relatively bright picture of Medicare's future triggered immediate debate over whether the forecast by the trustees, all members of President Obama's Cabinet, is realistic. The trustees cautioned that the improved outlook for Medicare hinges on a sustained commitment by the government and the health-care industry to rein in medical costs." But Richard Foster, the Medicare program's independent actuary, said that expectation is not "reasonable." The health law is unlikely to slow spending as much as anticipated, he said (Goldstein, 8/6).

"The report comes at a time of growing political ferment over the future of [Medicare and Social Security], which account for about one-third of all federal spending, and they provoked contradictory reactions," The New York Times adds. "Many advocates on the left seized on the updates to argue that no changes were needed, especially for Social Security, while some on the right said the report showed a need for cutbacks in future benefit promises or even for privatization." Medicare will become insolvent in 2029, the report said, and the Social Security trust fund will be "exhausted" in 2037 (Pear and Calmes, 8/5).

Los Angeles Times: Still, senior congressional Democrats and White House officials said the report shows the importance of their health overhaul. House Speaker Nancy Pelosi, D-Calif., said it showed the "remarkable impact of health reform." President Barack Obama said Medicare "is going to be more secure for our seniors and it's going to be there for future generations because of the changes we made."

"Senior administration officials also said Thursday that the success of the healthcare law would depend on ongoing vigilance by lawmakers on Capitol Hill. 'It's important to note that for the benefits of these reforms to be realized, they have to produce large improvements in efficiency and productivity,' said Treasury Secretary Timothy F. Geithner" (Levey, 8/5). 

The Wall Street Journal: "All sides agreed that Medicare faces insolvency in coming decades under current trends, and the debate over how bad the numbers are highlighted tough political decisions ahead over spending and taxes." Medicare's actuary Foster said one reason he doubted the projections was that Congress would likely  restore some Medicare cuts in order to avoid having doctors drop out of the program and risk causing "severe problems" for seniors. The trustees said "they were required to assume existing law would be implemented but had asked Mr. Foster to calculate what a more realistic scenario would look like" (McKinnon, 8/6).

USA Today: "Not so fast, Republicans responded, noting that the same savings are being used to help extend health insurance to 32 million more Americans. 'If you steal over a half-trillion dollars from Medicare to fund another unsustainable entitlement, Medicare won't be better off,' said Sen. Orrin Hatch, R-Utah" (Wolf, 8/6).

The Fiscal Times: "Virtually all the projected improvement in Medicare's long-run outlook stems from a big bet on higher productivity. Under the law, Medicare is supposed to increase its reimbursements to hospitals and doctors more slowly, on the assumption that productivity in health care climbs as quickly as in the rest of the economy." That is not at all certain, and The Fiscal Times notes that "health care prices have climbed faster than inflation, year after year" (Andrews, 8/5).

CongressDaily: "[M]uch of the report savings are attributed to a provision that ties Medicare payments for most goods and services, excluding doctors and drugs, to the overall economy's productivity, and some at the Centers for Medicare and Medicaid Services question if this provision will ultimately mirror the physician sustainable growth rate, which Congress regularly rolls back." On that note, the SGR demands a 23 percent cut to doctors pay at the end of the year, which the trustees must factor into their report by law, even though Congress will likely block the cut (McCarthy, 8/6).

Meanwhile, Kaiser Health News adds additional perspective on the intersection of the new health reform law and the projections for the future of Medicare and Social Security. : "If employers save money on health insurance because of the new health law, will they give their workers a raise? Absolutely, says a new report by the trustees of Social Security. The theory is that the health law will help the financial viability of Social Security because employers will shift money they now spend on health insurance into higher wages. That, in turn, will mean more taxes collected on fatter payrolls to support Social Security and Medicare" (Galewitz, 8/6).

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