It’s Time To Update and Improve the Annual Medicare Trustees’ Report

COMMENTARY Medicare

It’s Time To Update and Improve the Annual Medicare Trustees’ Report

Aug 23rd, 2021 4 min read
COMMENTARY BY
Robert E. Moffit, Ph.D.

Senior Fellow

Moffit specializes in health care and entitlement programs, especially Medicare.
House and Senate members cannot afford to shortchange the interests of 65 million beneficiaries and the more than 144 million taxpayers who fund their coverage and care. Terry Vine / Getty Images

Key Takeaways

Eating up ever larger chunks of federal tax dollars, Medicare is by far the largest “payer” in American health care.

Every American is affected, then, by what does or does not happen within the program.

The American people need and deserve an independent assessment of Medicare’s financial condition.

The Medicare trustees’ 2021 report could come any day now. It will detail the financial state of the Hospital Insurance Trust Fund, which finances Medicare beneficiaries’ hospitalization (Part A) services. It is not expected to bring glad tidings.

Last year, the trustees reported that the program spent $328.3 billion in 2019—about $1,000 for every man, woman and child in the U.S. They also warned that, absent reform, the trust fund would become insolvent in 2026, unable to pay for all its promised benefits.

The report also assesses the state of the Supplementary Medical Insurance (SMI) trust fund (Parts B and D), which finances physician and outpatient medical services and beneficiaries’ drug coverage. In 2019, those programs spent $467.9 billion—about $1,400 per American. The trustees warned that SMI spending was soaring, outpacing inflation and economic growth, and imposing big future financial burdens on beneficiaries and taxpayers alike.

No wonder so many are anxious to see this year’s report. Unfortunately, they’ve had to wait too long. Once again, the Medicare trustees report is late.

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By law, Congress is supposed to receive the report on April 1 of each year. Recently, however, under both Democratic and Republican administrations, delayed reporting has become routine. 

Timeliness matters. Both the White House and the Congress need time to prepare any legislative response to the trustees’ findings, addressing and resolving any financial difficulties afflicting Medicare. While the congressional calendar is crowded with appropriations bills and competing presidential and legislative priorities, House and Senate members cannot afford to shortchange the interests of 65 million beneficiaries and the more than 144 million taxpayers who fund their coverage and care.

Based on the Biden administration’s FY 2022 budget request, government actuaries estimate the Medicare’s total cost will increase to $995 billion—about $3,100 per person in the U.S.

Eating up ever larger chunks of federal tax dollars, Medicare is by far the largest “payer” in American health care. Because of its dominance in provider payment—and the large and demanding patient population it serves—the program strongly influences private markets, doctors, hospitals and other medical professionals. Every American is affected, then, by what does or does not happen within the program.

Perhaps the current statutory April 1 deadline is unrealistic. Maybe it simply does not allow the trustees or the staff at the Office of the Actuary enough time to do the work required to produce a report of such magnitude.

If an April 1 deadline is unrealistic, Congress should determine why and set a more appropriate date. Lawmakers could, for example, set the deadline at Sept. 30, the end of each fiscal year. This would encourage the president’s budget team to take cognizance of the trustees’ timely findings, and work through the fall to incorporate relevant Medicare recommendations in the president’s budget submission to Congress in the following calendar year.    

There’s a second administrative problem to be addressed: the absence of two, independent public trustees, a Democrat and a Republican. Appointed by the president and confirmed by the Senate, their job is to evaluate and co-sign the annual Medicare report. And, if they so desire, they may write an independent assessment.

The last two independent trustees were Dr. Charles Blahous of the Mercatus Center at George Mason University and Dr. Robert Reischauer of the Urban Institute, equally outstanding appointments. Yet these two positions have been vacant since 2015. Since then, only administration officials have signed off on this vital report.

In 1983, the National Commission on Social Security Reform, which secured a successful bipartisan agreement on Social Security reform, recognized that appointing two individuals from outside the executive branch on a bipartisan basis would be sound public policy—that these independent participants would help to instill confidence in the integrity of the giant Medicare and Social Security trust funds.

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Make no mistake. The annual Medicare trustees' reports are excellent products. Without fail, they produce a treasure trove of data and analysis. Their quality reflects the dedication, patriotism and professionalism of the hardworking staff of the Office of the Actuary at the Center for Medicare and Medicaid Services (CMS).

Nonetheless, given the gravity of the program and Medicare’s outsized impact on the health care sector of the economy, the timely appointment of public trustees is essential. The American people need and deserve an independent assessment of Medicare’s financial condition.

Partisan gridlock over such appointments is unacceptable. President Biden should act quickly to nominate—and the Senate should expeditiously confirm—two independent trustees to evaluate the Social Security and Medicare programs. Medicare patients and American taxpayers deserve no less.

This piece originally appeared in The Hill on 06/23/21

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