Wed, 10 Aug 22 11:02:27 +0000

What the Medicare Part A Very Update Means for You

Article Author:

Associated Press

Kate Ashford Nerdwallet

According to the June 2022 Medicare Trustee Report, at the current pace Medicare's hospital insurance trust fund will run out of money in 2028. prize. This is two years longer than previous estimates, but experts say it's still not good news and the government needs to stop playing with its thumbs.

What if the Trust Fund is depleted?

Medicare Part A would not implode if the Medicare hospital insurance trust fund was depleted. However, the program will not earn enough revenue to cover all operating costs due to a shortfall of approximately 10% from 2029.

"This portion of the Medicare program requires payments to providers and health insurance companies on time, and those payments become increasingly delayed over time. ,” says Matthew Fiedler, senior fellow of the USC-Brookings Schaeffer Initiative for Health Policy.

This backlog could create a major economic shock for hospitals that rely on Medicare revenues to operate. Ultimately, says Fiedler, "hospitals may reconsider how much they want to participate in the Medicare program."

It is important to understand that the Medicare Hospital Insurance Trust Fund does not fund all of Medicare, it funds Medicare Part A, or hospital insurance. . Medicare Part B, which covers doctor visits and outpatient care, and Medicare Part D, which covers prescription drugs, are funded primarily from patient premiums and government general revenues.

What is the most likely fix?

There are several ways governments can address this situation, from fine-tuning service coverage to redirecting revenues.

Move some Medicare Part A services to Part B

suggesting that they may move. Hospitalization — Part A to Part B.

"This will make the Part A trust fund look better, because we've taken some of the costs off the books," says Dr. Mark McClellan of Robert. J. Margolis He is Professor of Business, Medicine and Policy at Duke University and holds a PhD in Economics. "But it doesn't really change the overall cost or sustainability of the program."

It could mean that some post-acute services covered may be covered by the Part B deductible and 20% co-insurance. There are Medigap or Medicare Advantage plans that cover some costs.

Modernize Medicare drug benefits

When Medicare Part D was introduced in 2006, there weren't many expensive specialty drugs on the market. Today, governments bear most of the bills for expensive drugs. Another option is to reduce drug costs and apply the savings to a Part A trust fund. Current legislation in Congress will help Medicare beneficiaries spend less money on prescription drugs and gradually reduce the cost of certain expensive drugs.

" The Senate bill includes significant modernization of Medicare drug benefits, providing more comprehensive coverage for Medicare beneficiaries with high drug costs and allowing Medicare drug plans to be more aggressive with drug companies. It's about being able to negotiate," says McClellan.

Cut provider payments

In the short term, governments may cut Medicare payments to some or all Part A providers, says senior fellow , says Joseph Antos, Wilson H. Taylor Scholar in Health Care. Retirement policy with the American Enterprise Institute.

"Congress has done this before and can do it again, especially with other adjustments coming into effect in year 9 or 10 to return the money. Even more so," Antos said in an email. (The Congressional Budget Office has a 10-year cost estimate, so a 9- or 10-year adjustment schedule “maximizes recordable savings, but signals providers that the savings are temporary.”)

For beneficiaries, the impact of this approach would be minimal, but access to some healthcare providers could be compromised. , and some providers may add services not covered by Medicare to increase revenue, Antos explained.

Funding from General Revenue

The most likely option is for the government to authorize a one-time shot of the General Fund to the Medicare Trust Fund. "I could easily see them saying, 'Temporarily, for five years, allow an injection from the General Revenue to supplement that,'" he said.

If that happened, the country's debt would continue to grow, he said. "It doesn't affect the beneficiaries," Antos said. “It will affect their children.”

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This article was provided to his Associated Press by personal finance website NerdWallet. Kate Ashford is a writer for her NerdWallet. Email: kashfordâ†*nerdwallet.com.