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2018 Medicare Solvency Report Released

June 11, 2018

McDermott+Consulting

On June 5, 2018, the Board of Trustees released the 2018 annual report on solvency of the Medicare trust funds (the Hospital Insurance Trust Fund and the Supplementary Medical Insurance Trust Fund).

  • In 2017, Medicare covered 58.4 million people. Over 34 percent of these beneficiaries have enrolled in Part C (Medicare Advantage).
  • Total Medicare expenditures were $710 billion in 2017. The report estimates that Medicare’s total costs will grow from 3.7 percent of GDP in 2017 to 5.8 percent by 2038.
  • The estimated depletion date for the HI trust fund is 2026, three years earlier than last year’s report.
  • Over the past 10 years, Part D benefit payments have increased by an annual rate of 7.4 percent in aggregate and by 3.8 percent on a per enrollee basis. The Board notes this is due to varying prescription drug costs and utilization trends, citing a substantial increase in the proportion of prescriptions filled with low-cost generic drugs as helping to constrain cost growth, while a significant increase in the cost of specialty drugs as contributing to increased cost growth.
  • The Medicare Access and CHIP Reauthorization Act (MACRA) raises important long range concerns. In particular, the report calls out the five percent bonuses for advanced alternative payment models (APMs) and the $500 million per year in exceptional performer bonuses.
  • In addition, the report highlights MACRA’s legislated physician payment updates and states that they could be an issue in years where there is a large gap between physician costs and price updates.
  • The Board cautions that the health sector needs to transition to more efficient models of care delivery and urges consideration of further reforms in the near future.

 

For more information please contact Mara McDermott or Rachel Stauffer.

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