What Medicare Part A’s belly-up date means for you

Aug 9, 2022, 4:00 PM | Updated: Aug 10, 2022, 6:06 am
FILE - In this Aug. 8, 2020, photo a patient's vital signs are displayed on a monitor at a hospital...

FILE - In this Aug. 8, 2020, photo a patient's vital signs are displayed on a monitor at a hospital in Portland, Ore. At its current pace, Medicare’s Hospital Insurance trust fund will run out of money in 2028, according to the latest Medicare trustees report. That’s a two-year extension on the previous estimate. (AP Photo/Jenny Kane, File)

(AP Photo/Jenny Kane, File)

At its current pace, Medicare’s Hospital Insurance trust fund will run out of money in 2028, according to the June 2022 Medicare trustees report. That’s a two-year extension on the previous estimate, but experts say it’s still not good news, and the government needs to stop twiddling its thumbs. Here’s what you should know.

WHAT HAPPENS IF THE TRUST FUND IS DEPLETED?

If the Medicare Hospital Insurance trust fund is depleted, it doesn’t mean Medicare Part A will implode. But the program won’t have enough revenues to cover all operating costs, by a shortfall of about 10% starting in 2029.

“This part of the Medicare program won’t be able to make payments to health care providers and health insurers that are due, and those payments will become increasingly delayed over time,” says Matthew Fiedler, a senior fellow with the USC-Brookings Schaeffer Initiative for Health Policy.

This backlog could result in a big financial shock to hospitals that rely on Medicare revenues to operate. Ultimately, Fiedler says , “hospitals might rethink the extent to which they want to participate in the Medicare program.”

It’s important to understand that Medicare’s Hospital Insurance trust fund doesn’t finance all of Medicare — it funds Medicare Part A, or hospital insurance. Medicare Part B, which covers doctor’s appointments and outpatient care, and Medicare Part D, which covers prescription drugs, are funded mainly out of patient premiums and the government’s general revenues.

WHAT ARE THE MOST LIKELY FIXES?

There are several ways the government could handle the situation, from tweaking service coverage to redirecting revenues. Here are a few options:

Move some Medicare Part A services to Part B

Some experts have suggested that the government could shift some post-acute services — such as physical therapy or nursing management after a hospital stay — from Part A to Part B.

“That makes the Part A trust fund look better, because you’ve taken some of the expenses off the books,” says Dr. Mark McClellan , the Robert J. Margolis professor of business, medicine and policy at Duke University, who holds a doctorate in economics. “But that’s not really changing the overall cost or sustainability of the program.”

For Medicare beneficiaries, this change could mean that some post-acute services that are covered 100% under Part A could be subject to the Part B deductible and 20% coinsurance, unless the beneficiary has a Medigap or Medicare Advantage plan that covers some costs.

Modernize the Medicare drug benefit

When Medicare Part D was introduced in 2006, there weren’t as many expensive specialty drugs on the market. Today, the government foots the majority of the bill for high-cost drugs. Lowering drug costs and applying those savings to the Part A trust fund is an option. Current legislation in Congress would help Medicare beneficiaries spend less on prescription drugs and decrease costs for specific high-cost drugs over time.

“The Senate bill includes an important modernization of Medicare’s drug benefit, to provide more comprehensive coverage for Medicare beneficiaries with high drug costs and to get Medicare’s drug plans to negotiate more aggressively with drug manufacturers,” McClellan says.

Cut payments to providers

In the short term, the government could reduce Medicare payments to some or all Part A providers, said Joseph Antos, senior fellow and Wilson H. Taylor scholar in health care and retirement policy with the American Enterprise Institute.

“Congress has done this before and can do it again, particularly if this is accompanied by some other adjustment that takes effect in year nine or 10 to give the money back,” said Antos in an email. (The Congressional Budget Office does 10-year cost estimates, so a nine- or 10-year adjustment schedule “maximizes scorable savings but signals to providers that the cut would be temporary,” Antos said.)

For beneficiaries, the impact from this approach would be minimal, although it may reduce access to some providers or lead to some providers adding services that aren’t covered by Medicare to increase revenues, Antos explained.

Move funds from general revenues

The most likely option is for the government to authorize a one-time shot of general funds to the Medicare trust fund. “I could easily see how they would say, ‘For a temporary basis, for five years, we will authorize an infusion from general revenues to top it up,'” Antos said.

If that happens, he said, the country’s debt will continue to increase. “That would not have an impact on beneficiaries,” Antos said. “It would have an impact on their children.”

_______________________________________________________

This article was provided to The Associated Press by the personal finance website NerdWallet. Kate Ashford is a writer at NerdWallet. Email: [email protected]

RELATED LINKS:

NerdWallet: Medicare Part A: What it covers, what it costs https://www.nerdwallet.com/article/insurance/medicare/what-is-medicare-part-a?utm_campaign=ct_prod&utm_source=ap&utm_medium=mpsyn

Centers for Medicare & Medicaid Services: 2022 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds https://www.cms.gov/files/document/2022-medicare-trustees-report.pdf

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

(AP Photo/Gerry Broome, File)...
Associated Press

Fish and Wildlife shoots wrong wolf, more attacks confirmed

Wolves from two packs in northeast Washington state have attacked more cattle
8 hours ago
Low yielding cotton plants grow at sunset, Tuesday, Oct. 4, 2022, near Cotton Center, Texas. Drough...
Associated Press

Drought takes toll on country’s largest cotton producer

LUBBOCK, Texas (AP) — The cotton harvest is about to get underway in the Texas High Plains, the windswept region that grows most of the crop in the nation’s top cotton-producing state. But Barry Evans, like many others, has already walked away from more than 2,000 acres (809 hectares) of his bone-dry fields. “It just […]
1 day ago
From left, Minister of State for Northern Ireland Steve Baker, the Secretary of State for Northern ...
Associated Press

UK, Ireland signal new hope of deal to end Brexit trade feud

LONDON (AP) — Britain and Ireland hailed a new spirit of compromise on Friday in a grinding feud over post-Brexit trade rules, expressing hope of making enough progress in the next three weeks to avoid a destabilizing new election in Northern Ireland. It comes as new British Prime Minister Liz Truss seeks to improve relations […]
1 day ago
Branislav Borenovic, leader of Party of Democratic Progress (PDP), addresses the media after submit...
Associated Press

Bosnia election officials investigate possible vote-rigging

SARAJEVO, Bosnia-Herzegovina (AP) — Bosnia’s election authorities expressed concerns Friday over widespread problems at polling stations and reports of irregularities and vote-rigging in the general election last weekend. They ordered ballot checks at over 1,000 polling stations and promised to investigate all potential failings before certifying the results of the vote. Members of the country’s […]
1 day ago
Associated Press

Malaysian wildlife traffickers hit with US sanctions

WASHINGTON (AP) — The U.S. on Friday targeted a Malaysian wildlife trafficker and his transnational criminal organization for financial sanctions related to the illegal shipment of rhino horn, ivory and other specimens. The Treasury Department said Malaysian national Teo Boon Ching, his trafficking organization and the Malaysian firm Sunrise Greenland Sdn. Bhd. engage in the […]
1 day ago
Associated Press

Pink diamond breaks auction record in Hong Kong

HONG KONG (AP) — A pink diamond was sold for $49.9 million in Hong Kong on Friday, setting a world record for the highest price per carat for a diamond sold at auction. The 11.15-carat Williamson Pink Star diamond, auctioned by Sotheby’s Hong Kong, sold for $392 million Hong Kong dollars ($49.9 million). It was […]
1 day ago

Sponsored Articles

Anacortes Christmas Tree...

Come one, come all! Food, Drink, and Coastal Christmas – Anacortes has it all!

Come celebrate Anacortes’ 11th annual Bier on the Pier! Bier on the Pier takes place on October 7th and 8th and features local ciders, food trucks and live music - not to mention the beautiful views of the Guemes Channel and backdrop of downtown Anacortes.
Swedish Cyberknife Treatment...

The revolutionary treatment of Swedish CyberKnife provides better quality of life for majority of patients

There are a wide variety of treatments options available for men with prostate cancer. One of the most technologically advanced treatment options in the Pacific Northwest is Stereotactic Body Radiation Therapy using the CyberKnife platform at Swedish Medical Center.
Work at Zum Services...

Seattle Public Schools announces three-year contract with Zum

Seattle Public Schools just announced a three-year contract with a brand-new company to the Pacific Northwest to assist with their student transportation: Zum.
Swedish Cyberknife 900x506...

June is Men’s Health Month: Here’s Why It’s Important To Speak About Your Health

According to the Centers for Disease Control and Prevention, men in the United States, on average, die five years earlier than women.
...

Anacortes – A Must Visit Summertime Destination

While Anacortes is certainly on the way to the San Juan Islands (SJI), it is not just a destination to get to the ferry… Anacortes is a destination in and of itself!
...

Ready for your 2022 Alaskan Adventure with Celebrity Cruises?

Celebrity Cruises SPONSORED — A round-trip Alaska cruise from Seattle is an amazing treat for you and a loved one. Not only are you able to see and explore some of the most incredible and visually appealing natural sights on the planet, but you’re also able to relax and re-energize while aboard a luxury cruise […]
What Medicare Part A’s belly-up date means for you