The Medicare and SS Trustees Reports – Where Do Things Stand?

The 2024 Reports from the Medicare Trustees and the Social Security Trustees are here.  Let’s dig in to learn where things stand on the perennial question of insolvency and their recommendations. 

The 2024 Medicare Trustees Report showed a positive trend for the Hospital trust fund (Part A), with 5 more years of solvency added.  This moves out the point at which all benefits could be paid at current levels from 2031 to 2036. 

The improvement was due to lower than expected Medicare trust fund expenditures for 2023 (especially for inpatient hospital and home health services), higher payroll tax income, and “a policy change correcting for the way medical education expenses are accounted for in Medicare Advantage rates starting in 2024.”  

In other words, they changed the way the assumptions were calculated.   

The trustees noted 3 factors related to the pandemic: 

  1. Beneficiaries who died from COVID-19 were the sickest with more comorbidities.  Now, the remaining Medicare population is “healthier” as a percentage which leads to lower overall projected spending.  
  1. The expiration of the waiver requiring a 3-day inpatient stay to receive SNF services. Trustees assume that the 3-day inpatient stay requirement will now remain in place, which will increase inpatient spending by 1.9 percentage points and decrease SNF spending growth by 7.5 percentage points in 2024.      
  1. Lower than normal home health spending.  Due to staffing shortages in 2023, home health expenditures were still lower than expected.  But Trustees believe that demand will increase in 2024, and are projecting an increase in the home health spending growth factor by 2.9 percentage points for the next 3 years (2024-2026).   

By contrast, the Social Security Trustees noted a neutral trend from last year.  For Social Security, insolvency is coming in 9 years (CY 2033), which is the same projection as last year.  Funding was projected to decrease due to declining fertility rates but was projected to increase due to increased labor productivity.  So, the two factors equalized the other out.   

Medicare and Social Security Trustees said that Congress and the White House need to act now to be able to create solutions that can be more flexible and gradual.    If the can continues to be kicked down the road, cuts will have to be harsher and more immediate.  Trustees also recommended that Congress and the White House work together to come up with solutions.   

So, is this the year that Congress and the administration address Medicare and Social Security insolvency?  It looks unlikely.  When Speaker Johnson (R-LA) took leadership in January, he announced he would create a bipartisan fiscal commission to address the national debt and necessity of spending cuts.  But news agencies have already reported the Commission is DOA.  Sponsors of a bill to create such a commission in both the House and Senate have said that they have no support to move the bills forward.  A commission faces bipartisan disapproval, with Democrats concerned a commission would cut benefits like Social Security and Medicare and Republicans concerned a commission would be a vehicle for tax increases.    

So, the deadline towards insolvency once again looms, without a path to address it…. 

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