Medicare's trust fund will only begin to start running out of money in 2026, two years later than the program's trustees estimated on greater-than-expected slowdown in health spending, the government reported Friday.
The Social Security and Medicare Board of Trustees said that a slowdown in healthcare helped Medicare gain more time before it will no longer be able to pay out 100% of benefits. But the program is still facing significant funding shortfalls. Medicare is the insurance program for Americans 65 and older.
The improved outlook for Medicare was due in part to the cost controls resulting from the Affordable Care Act, the report said, and to lower projected hospital insurance spending.
"Thanks to the Affordable Care Act, we are taking important steps to improve the delivery of care for seniors with Medicare. These reforms aim to reduce spending while improving the quality of care, and are an important down payment on solving Medicare's long term financial issues," Marilyn Tavenner, Administrator of the Centers for Medicare & Medicaid Services, said in a statement.
The report went on to note that Medicare spending per beneficiary has increased modestly - 1.7 percent annually from 2010 to 2012 - and is projected to continue to grow slowly over the next several years.
"The Medicare report demonstrates, once again, the importance of the Affordable Care Act, which has strengthened Medicare's finances by reining in health care costs," Treasury Secretary Jack Lew said in prepared remarks.
"The Trustees project that total Medicare cost (including both HI and SMI expenditures) will grow from approximately 3.6 percent of GDP in 2012 to 5.6 percent of GDP by 2035, and will increase gradually thereafter to about 6.5 percent of GDP by 2087," according to the report.
