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Medicare trust fund expenses growing.

A Medicare Trustees annual report found both the Medicare Hospital Insurance Trust Fund and the Supplementary Medical Insurance Trust Fund expenditures are growing faster than the rest of the U.S. economy.

According to the report, released in late March, the hospital trust fund, which finances a number of Medicare services, will become insolvent earlier in 2019 than reported previously, with expenditure growth expected to average 7.4 percent each year for the next 10 years, a higher rate than either the gross domestic product or the consumer price index. This year, the fund will spend more than its income, and from 2009 through 2017 about $342 billion will need to be transferred from the federal treasury to cover beneficiaries' hospital insurance costs.

"Although Congress has never allowed a Medicare trust fund to become exhausted, under the current payment structure, a person who is 54 years old today cannot be assured that Medicare hospital insurance benefits will be there when he or she turns 65 and first becomes eligible for Medicare," said Centers for Medicare and Medicaid Services acting Administrator Kerry Weems.

The Supplementary Medical Insurance Trust Fund, which also supports Medicare services, is automatically in financial balance because beneficiary premiums and general revenue financing are reset each year to match the expected program costs for the following year. Yet Part B benefit payments, which help fill gaps in Medicare coverage and are paid via the supplementary trust fund, have increased by an average of 9.6 percent for each of the past five years.

The "2008 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds" is available at www.cms.hhs.gov/Reports TrustFunds/downloads/ tr2008.pdf.
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Title Annotation:NATION IN BRIEF
Author:Currie, Donya
Publication:The Nation's Health
Date:Jun 1, 2008
Words:288
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