The Board of Trustees for Social Security and Medicare recently released a bombshell of a report that shows this essential health safety net is coming apart at the seams. The report estimates the Medicare trust fund will run dry in 2024, five years earlier than last year’s estimate, and went on to explain, “The fund is not adequately financed over the next ten years.” In an alternate estimate also released, the Centers for Medicare and Medicaid Services’ Chief Actuary Rick Foster painted an even more dire picture, reporting that Medicare's unfunded obligations could be significantly higher, and long-term costs could dramatically increase from the numbers provided in the Board of Trustee’s report.
However, you don’t need to read the 265-page report to understand why Medicare is going broke. Last year, Medicare spent $523 billion, but only took in $486 billion—leaving a $37 billion deficit in just one year. With 10,000 new individuals becoming eligible each day, it’s only going to get worse.
For many lawmakers and citizens, this news was disturbing but not surprising. This is exactly why Republicans are demanding that we stop raiding the current program and reform of the system for future generations. Doing nothing is not an option. The status quo will mean the end of Medicare as we know it. Yet instead of putting forth new ideas to reform the program and use the savings to shore up Medicare for future generations, Democrats transferred $500 billion out of Medicare to fund their latest entitlement program, the massive health care law.
Foster testified before our committee that changes included in the health care law will cut funding for hospitals, skilled nursing homes, diagnostic labs and many other services by more than half the levels under prior law. In addition, future Medicare payments will be considerably below the current relative level. These rates would cause a significant number of providers to leave the market.
After raiding the current system, the health care law then takes the one aspect of Medicare that everyone agrees is broken and uses it as a model for the future. The health care law establishes the Independent Payment Advisory Board (IPAB) as a tool that is supposed to hold down costs; it is modeled after the failed formula that sets the underfunded Medicare physician reimbursement rates. President Obama recently doubled down on this controversial rationing board, and it seems to be the Democrats' only proposal.
We may not all agree on ways to reform the system, but at the very least it is time for our colleagues on the other side of the aisle to wake up and admit that we can’t continue to defend the status quo. These new reports from the Medicare trustees make that much perfectly clear.