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Trustees: Medicare Part A Fund Will Go Broke by 2017

Cheryl Clark, for HealthLeaders Media, May 12, 2009

The difficult economic times have "further deteriorated” the Medicare Trust Fund and the program that pays for Part A hospital services will be exhausted by 2017 unless there is "prompt action" to safeguard the program, according to a report released today by the Medicare Board of Trustees.

The Part A fund will be exhausted two years earlier than the trustees predicted in last year's report because of "much lower projected payroll tax income as a result of the recession."

"Total Medicare expenditures were $468 billion in 2008 and are expected to increase in future years at a faster pace than either workers’ earnings or the economy overall," the report says.

"These projections demonstrate the need for timely and effective action to address Medicare's financial challenges" with consideration of reforms "in the relatively near future.  The sooner the solutions are enacted, the more flexible and gradual they can be."

Health and Human Services Secretary Kathleen Sebelius said the report "should trouble anyone who is concerned about the future of Medicare and healthcare in America." She calls it "a wake-up call for everyone who is concerned about Medicare and the health of our economy."

She says the Obama administration "isn't just worrying; we're doing something about it," and called for actions that "go beyond the cost-savings policies in the President's budget.  The only way to slow Medicare spending is to slow overall health system spending through comprehensive and carefully crafted legislation."

One key, she says, is to "fix what's broken in the rest of the system" by assuring better healthcare for uninsured Americans before they are eligible for Medicare. Part of the problem today, she says, is that when seniors and the uninsured do become eligible, "they are less healthy and cost the system more."

She adds, "Reform can't wait. All of us in the administration look forward to working with Congress to make reform a reality."

Approximately 45.2 million people are covered by Medicare: 37.8 million aged 65 and older, and 7.4 million disabled.


Cheryl Clark is senior quality editor and California correspondent for HealthLeaders Media. She is a member of the Association of Health Care Journalists.
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