Report Shows Better Outlook for Medicare
By ROBERT PEAR
WASHINGTON — The financial outlook for Medicare has improved because of a stronger economy and slower growth in health spending, and the financial condition of Social Security has not worsened but is still unsustainable, the Obama administration said Friday.
“The projections in this year’s report for Social Security are essentially unchanged from last year, and those for Medicare have improved modestly,” the Treasury secretary, Jacob J. Lew, said.
The Medicare trustees — four federal officials and two public representatives — said in their annual report that the “modest improvement” in the outlook for Medicare’s long-term finances reflected lower projected spending for skilled nursing homes and private Medicare Advantage plans.
The administration said the outlook for the Medicare trust fund was brighter because of the 2010 health care law. The law squeezed nearly $500 billion out of Medicare over 10 years, in part by trimming payments to many health care providers, including nursing homes and private health plans.
But the number of Medicare beneficiaries will grow rapidly, to 73 million in 2025 from 52 million today, so paying for the program remains a huge challenge, administration officials said.
Older Americans stand to benefit from the slower growth in health spending. The standard Medicare premium paid by most beneficiaries will probably stay at the current level, $104.90 a month, next year, the trustees said in their report.
Under current law, the administration said, Medicare’s hospital insurance trust fund will be exhausted in 2026, and the Social Security Trust Fund will be depleted in 2033. The administration said in its 2012 report that the Medicare trust fund would run out of money in 2024, and the Social Security fund in 2033.
The trustees urged Congress to shore up the finances of both programs, but few lawmakers are clamoring for immediate action.
Medicare’s deterioration slows as health law blunts costs
WASHINGTON — The $574 billion Medicare health system, the second-largest U.S. social services program, will exhaust its main financial trust fund in 2026, two years later than predicted as the Affordable Care Act helps control costs.
Assets for the Part A trust that pays for hospital visits, nursing care and related services for Medicare’s 51 million elderly and disabled beneficiaries, fell $23.8 billion in 2012, according to a report today from the program’s trustees. That compares with a net drop in assets of $27.7 billion for 2011.
Next Year’s Health Plan Rates
By THE EDITORIAL BOARD
Republicans are doing their best to persuade Americans that the Affordable Care Act will drive health insurance premiums so high that consumers will experience “rate shock.” That fear-provoking tale seems much less credible now that the rates proposed by health insurers for individual coverage on the new health care exchanges have been made public in several states. For the most part, the premiums will increase only slightly or even decrease for individuals and family coverage on the exchanges, electronic marketplaces in which consumers choose among a variety of plans with differing benefits and costs.
The reported rates are in states that have elected to run their own exchanges, which are set to start enrolling people in October for coverage that begins in January 2014. Many states with Republican governors have refused to set up exchanges and have left that task to the Obama administration. In 19 states where the exchanges will be entirely run by the federal government, more health insurance companies are entering the markets and injecting competition that should help hold down costs, the administration said on Thursday. Premiums are subject to many competing pressures, but, in several states, competition appears to be offsetting factors that might push rates up.
In California, officials announced last week that 13 insurers were awarded contracts to sell policies on the state’s health care exchanges next year. The companies submitted bids, which came in much lower than virtually all experts and actuaries had forecast.
Blue Shield of California said that its premiums for individual customers would increase about 13 percent on average next year over current premiums; about 8 percent of that increase would the cover rising cost of medical care, which would have happened anyway. The other 5 percent pays for better benefits, guaranteed coverage for pre-existing conditions, and taxes and fees imposed on insurers by the reform law.
The cost curve is bending. Does Obamacare deserve the credit?
By Ezra Klein,
There was a time when all anyone in Washington wanted to talk about was “bending the health-care cost curve.” Forget covering the uninsured — the ultimate test of the Affordable Care Act would be the trajectory of health-care costs.
But Washington has a short memory. That whole “curve” thing was years ago. Meanwhile, we’ve turned our attention to other things, like “Fast & Furious 6.”
Yet, quietly, the cost curve has begun to bend.
“National health spending grew by 3.9 percent each year from 2009 to 2011, the lowest rate of growth since the federal government began keeping such statistics in 1960,” reports the Kaiser Family Foundation. Early data suggest that the numbers held into 2012. So the curve hasn’t just bent; it has bent more than ever.
In a new paper, Harvard University scholars David Cutler and Nikhil Sahni calculate that if those numbers hold over the next decade, the government will save up to $770 billion, employers will save up to $430 annually on each covered worker and households will spend up to $290 less on annual health costs. “Slow health care spending growth might thus bring much-needed relief throughout the economy,” they write.
Ah, that pesky “might.” Here’s the catch: The curve is bending, but we don’t really know why, and we don’t know if it’ll stay bent.
Is it the economy, stupid?
Medicare trust fund projected to last until 2026 as health costs drop
By Lori Montgomery,
Falling health-care costs are brightening the financial outlook for Medicare, extending the life of the trust fund that supports the program until 2026 — two years later than previously forecast.
The new projections, released Friday by the program’s trustees, credit President Obama’s Affordable Care Act in part for the improvement in the finances of the federal health insurance program for the elderly. The act’s limits on Medicare Advantage, a more expensive form of Medicare run by private insurers, are proving more effective than previously forecast, the report said.
The trustees also cited lower-than-expected spending in “most . . . service categories — especially skilled nursing facilities,” a development that is not well understood. Costs have been slowing throughout the health-care industry, partly because of the recent recession, economists say, but also because of what appear to be more fundamental changes aimed at reducing waste and improving health outcomes.
The trustees reported no such gains in the finances of Social Security, but no significant deterioration, either. The Social Security trust funds will have enough cash to pay full retirement and disability benefits until 2033, the report said.
Both programs still face huge long-term financial problems as the baby-boom generation retires. And on Friday, analysts worried that the sunnier projections, together with an improving economy and a rapidly shrinking federal budget deficit, could serve to further dampen enthusiasm in Washington for tackling the nation’s toughest fiscal problems.
Are Obamacare’s exchanges competitive? Here’s what the experts say.
By Sarah Kliff,
One of the first tests of President Obama’s health-care overhaul is whether enough companies sign up to create competition and deliver lower prices on government-run insurance marketplaces.
On Thursday, the administration said that more than 120 health-care plans had applied to sell in the 19 state insurance exchanges that the government will run.
The White House claimed victory, arguing that the turnout ensures there will be robust competition to hold down costs.
Health policy experts were more cautious, though, in characterizing insurers’ enthusiasm to sell on these new marketplaces, and what that would mean for the price of health insurance.
“I would characterize it as modest plan competition,” Caroline Pearson, vice president for health reform at Avalere Helath, said. “In most markets, there seems to be a bit more choice than what’s available in the market today. But we’re certainly not seeing a wild influx of plans into the market.”
Starting in October, each state will have a new insurance marketplace — an Expedia-like Web site where residents can comparison shop for health insurance plans. Low- and middle-income Americans may qualify for a tax credit to cover a portion of their premiums.
Seventeen states are running their own health insurance exchanges. The federal government has a role in administering the rest, either in partnership with a state or overseeing the task completely.
Health exchange options for small businesses will be limited until 2015
By Sandhya Somashekhar,
The Obama administration confirmed Friday that a piece of the 2010 health-care law aimed at helping small businesses provide insurance to their workers will be delayed by a year.The office in charge of Medicaid and Medicare announced that it was on track for an Oct. 1 launch of the federal SHOP Exchange, an online marketplace where companies with fewer than 50 employees would be able to buy insurance for their workers and get a tax credit.
But employees will not be able to choose from a variety of plans, as was initially expected. They will be able to choose only one plan. The full range of options will not be available until 2015, the agency said.
The delay, proposed earlier this year, upset some business advocates and raised questions about whether the administration was behind on implementing the health-care law.
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