Guest column submitted by U.S. Senator Mike Crapo
More than 355,000 Idahoans—approximately 19 percent of Idaho’s population—are enrolled in Medicare, according to April 2021 data from the Centers for Medicare & Medicaid Services. To maintain the promises made to protect current Idaho Medicare recipients, while strengthening the system to guarantee benefits for future retirees, we must shore up Medicare, which is nearing insolvency. A clear understanding of the program’s current funding status, taking into account the impacts of the COVID-19 pandemic, is critical as Congress considers spending measures and necessary changes to address Medicare’s insolvency.
Medicare was established nearly 56 years ago to provide Americans 65 and older, and later permanently disabled individuals under 65, with health insurance. Medicare consists of four parts (A-D). The Medicare Hospital Insurance (HI) trust fund pays for Medicare’s Part A functions, which include Medicare recipients’ inpatient hospital services, skilled nursing care, hospice care and some home health services.
Alarmingly, Medicare’s HI trust fund is currently running a cash flow deficit, and if changes are not made, is expected to be depleted within five years. In 2020, the Medicare Trustees projected HI trust fund expenditures would exceed annual income by $9.2 billion. As a result, they predict the trust fund reserves will be depleted by 2026, at which time it will no longer be able to pay full benefits for seniors. Under existing laws, that could mean benefits cuts for Idaho and other Medicare enrollees as early as 2026.
The Congressional Budget Office (CBO) has sounded similar alarms. On September 2, 2020, the CBO estimated the trust fund could run out of money in 2024, two years earlier than the Medicare Trustees forecasted. This year, the CBO extended its insolvency prediction to 2026.
However, there is substantial uncertainty the trust fund could hold out that long. Extraordinarily low HI trust fund reserve amounts do not seem enough to sustain historic Medicare spending until 2026. Additionally, the 2020 Medicare Trustees report did not include analysis of the potential effects of the pandemic on the Medicare program. The significant, but necessary, Medicare funding Congress made available to hospitals and other health care providers in response to the pandemic may have inadvertently accelerated the insolvency of the HI trust fund. Unemployment caused by the pandemic likely resulted in less revenue flowing into the HI Trust Fund.
Taking into account Medicare’s importance to many Idahoans and Americans, as Ranking Member of the Senate Finance Committee, I raised concerns about the long-term solvency of the HI trust fund during U.S. Department of Health and Human Services Secretary Xavier Becerra’s confirmation hearing in February. Then, on May 24, 2021, Representative Kevin Brady (R-Texas), Ranking Member of the House Ways and Means Committee, joined me in sending a letter to U.S. Treasury Secretary Janet Yellen requesting a revised HI trust fund insolvency projection as soon as possible. As Congress is expected to consider additional health care related legislation over the coming months, we urged Secretary Yellen to provide a revised insolvency projection that accounts for the impacts of the pandemic. We wrote, “Before Congress debates any further legislation that impacts the Medicare program, it is imperative that policymakers have accurate information explaining when the HI trust fund will be insolvent.”
I am deeply concerned Medicare’s already rapidly approaching insolvency may be hastened by the pandemic, and time is of the essence in addressing the program’s shortfalls. We simply cannot afford to wait months for the next Medicare Trustees report to be made public. The new Administration should work promptly with Congress in a bipartisan way to ensure Medicare is able to serve Idaho’s current and future Medicare beneficiaries.
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