Strengthening Medicare: The Trustees Report

If you or a loved one relies on Medicare, you know that having Medicare coverage means peace of mind in getting the care you need.  But too many Americans worry that Medicare won’t be there for them in the future or won’t be there for their children and grandchildren.  

That’s why the solvency of the Medicare trust fund is such an important priority for me and my agency, the Centers for Medicare & Medicaid Services (CMS).

This week brought some very good news for the 46.3 million people receiving Medicare benefits and the millions more who are near retirement or thinking about their future health care needs.

Earlier this week, I wrote about a report we released detailing how the Affordable Care Act is saving Medicare billions of dollars today and will save considerably more money in the near future. The Affordable Care Act is not only succeeding in giving Medicare beneficiaries new benefits – like cost-free preventive services, a $250 rebate for those in the prescription drug donut hole, and a new annual wellness visit with your doctor – but it is adding years of peace of mind for all of us who rely on Medicare now and in the future.

Yesterday’s report from the independent Medicare Trustees confirmed the savings we estimated from the Affordable Care Act.  Some of the highlights:

The Medicare Trust Fund is in great shape.  The savings from the Affordable Care Act will keep Medicare financially solvent until 2029.  That is 12 years longer than we estimated last year.  A healthy Medicare Trust Fund means health care security for Americans relying on Medicare.

We’re already lowering costs in Medicare.  In 2009, Medicare provided health insurance coverage to 46.3 million people – mostly seniors and people living with disabilities.  And on average, Medicare spent about $11,700 on health care for every beneficiary. These costs were slightly lower than we thought they were going to be when we released last year's Trustees Report.

The Affordable Care Act is going to keep costs under control while improving quality and access.  The way we measure this is by looking at Medicare costs as a percent of Gross Domestic Product (GDP) – that lets us understand Medicare costs in context of our overall economy and filters out the effect of inflation so we can see how costs are really increasing.  In 2009, total Medicare costs were 3.5 percent of GDP.  By staying on track with the reforms under the Affordable Care Act, Medicare costs will be just 6.4 percent of GDP in 2084.  Without the Affordable Care Act, we would expect costs to be nearly double that amount, or 11 percent of GDP.  And at the same time, the Affordable Care Act is bringing Medicare beneficiaries new benefits and higher quality care.

For those of you who would like to read more on the specifics in the Trustees Report, check out my post on medicare.gov.

UPDATE, August 7: President Obama highlights the Trustees Report in his weekly address. The audio and video of the address will be available online at www.whitehouse.gov at 6:00 am ET, today, Saturday, August 7, 2010."