What does dating a pot-bellied Medicare Part A level mean for you | Free time

At the current rate, the Medicare hospital insurance trust fund will expire in 2028. June 2022 Report of the Medicare Trustees. That’s a two-year extension of the previous estimate, but experts say it’s still not good news and the government needs to stop twiddling its fingers. Here’s what you need to know.

What happens when the trust fund runs out?

If the Medicare hospital insurance trust fund is exhausted, it does not mean Medicare Part A will explode. But the program will not have enough revenue to cover all operating costs, due to a shortfall of about 10% starting in 2029.

“This part of Medicare will not be able to make the payments to health care providers and health insurers that are due, and those payments will be increasingly delayed over time,” says Matthew Fiedler, a senior fellow at USC-Brookings Schaeffer. Health Policy Initiative.

That backlog could come as a big financial shock to hospitals that depend on Medicare revenue to operate. Ultimately, Fiedler says, “hospitals may reconsider how much they want to participate in Medicare.”

It’s important to understand that the Medicare hospital insurance trust fund doesn’t fund all of Medicare—it funds Medicare Part A, or hospital insurance. Medicare Part Bwhich covers doctor appointments and outpatient care, and Medicare Part Dwhich covers prescription drugs, is funded mainly by patient contributions and general government revenue.

What are the most likely fixes?

The government can solve the situation in several ways: from adjusting the coverage of services to redirecting revenues. Here are some options:

Move some Medicare Part A services to Part B

Some experts have suggested that the government could move some post-acute services – such as physical therapy or post-hospital care – from Part A to Part B.

“It makes the Part A trust fund better because you’ve taken some of the cost off the books,” says Dr. Mark McClellan, the Robert J. Margolis of Duke University, who holds a Ph.D. “But it doesn’t really change the overall cost or sustainability of the program.”

For Medicare beneficiaries, this change may mean that certain post-acute care services that are 100% covered under Part A may be subject to a Part B deductible and a 20% coinsurance if the beneficiary does not have a Medigap or Medicare Advantage plan that covers some expenses.

Modernize Medicare

When Medicare Part D was introduced in 2006, there weren’t that many expensive specialty drugs on the market. Today, the government pays most of the bills for expensive drugs. Reducing drug costs and applying those savings to the Part A trust fund is an option. Legislation currently in Congress will help Medicare beneficiaries spend less on prescription drugs and lower costs for certain high-cost drugs over time.

“The Senate bill provides important modernization of Medicare drug benefits to provide more comprehensive coverage for Medicare beneficiaries with high drug costs and force Medicare drug plans to negotiate more aggressively with drug manufacturers,” says McClellan.

Reduce payments to suppliers

In the short term, the government could cut Medicare payments to some or all Part A providers, said Joseph Antos, a senior fellow and the Wilson H. Taylor Scholar in Health and Pension Policy at the American Enterprise Institute.

“Congress has done this before and may do it again, especially if it is accompanied by some other adjustments that would take effect in the ninth or tenth year to bring the money back,” Antos said in an email. (The Congressional Budget Office estimates spending over 10 years, so a nine- or 10-year adjustment schedule “maximizes savings but signals to providers that the reduction will be temporary,” Antos said.)

For beneficiaries, the impact of this approach would be minimal, although it could reduce access to some providers or cause some providers to add services not covered by Medicare to increase revenue, Antos explained.

Move funds from general revenues

The most likely option is to allow the government to make a one-time transfer of the pooled funds to the Medicare trust fund. “I could easily see them saying, ‘Temporarily, for five years, we’re going to allow an infusion from general revenues to replenish,'” Antos said.

If that happens, he said, the country’s debt will grow. “It will not affect the beneficiaries,” said Antos. “It would affect their children.”

This article was written by NerdWallet and originally published by The Associated Press.

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