Health Law Extends Medicare Solvency to 2029, Trustees Say

John Commins, August 5, 2010

Medicare's financial stability was "substantially improved" by the passage this spring of the Patient Protection and Affordable Care Act, which will extend the solvency of the program for another 12 years to 2029, according to the 2010 Medicare Trustees Report released Thursday.

Despite the extended solvency, the trustees warned that Medicare is still not adequately financed over the next 10 years. "HI (Hospital Insurance Trust Fund) expenditures have exceeded income annually since 2008 and are projected to continue doing so under current law through 2013. However, the savings from the healthcare reform law is expected to generate surpluses from 2014 through 2022," the report states.

"Beginning in 2014, trust fund surpluses are estimated to occur throughout the short-range projection period and for several years thereafter. The shortfalls projected for the next four years can be met by redeeming trust fund assets, which at the beginning of 2010 were $304 billion, but the asset balance would fall below the Trustees' recommended minimum level starting in 2012 under the intermediate assumptions," the report states.

In 2009, 46.3 million people were covered by Medicare: 38.7 million aged 65 and older, and 7.6 million disabled. About 24% of beneficiaries enrolled in Part C private health plans that contract with Medicare to provide Part A and Part B health services. Total benefits paid in 2009 were $502 billion. Income was $508 billion, expenditures were $509 billion, and assets held in special issue U.S. Treasury securities were $381 billion, the report stated.

John Commins

John Commins is a senior editor at HealthLeaders Media.

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