Coverage
Medicare to Avoid Spending Cuts in 2017
by Christian Worstell | Published April 22, 2021 | Reviewed by John Krahnert
Medicare will avoid mandatory spending cuts in 2017, according to a report released July 13 by the program’s trustees.
The 2016 forecast predicted the trust fund for Part A of the federal Medicare program — which provides health care benefits to senior citizens and select disabled persons — would remain solvent only through 2028 and thus would trigger spending cuts in 2017. But new information shows the fund will remain solvent through 2029 and avoid any immediate spending cuts.
Automatic Medicare Cuts Not Necessary
Part A of Medicare helps to cover hospital, home health, nursing home and hospice care costs.
2017 Medicare spending cuts were projected to be roughly $1.3 billion, or 0.2 percent of the program’s assets. The cuts would be overseen by the creation of an Independent Payment Advisory Board (IPAB), which would consist of either a 15-person panel or the Health and Human Services Department.
The updated funding forecast was secure enough for Medicare to avoid any automatic cuts, which happen when program spending is projected to exceed certain levels.
Improved Outlook for Medicare Funding
The reasons cited for Medicare’s improved financial outlook include health costs rising slower than expected and predictions that Medicare beneficiaries will utilize hospitals less often.
In 2015, it was projected that the Medicare trust fund would be depleted by 2030. The trust fund is financed primarily through payroll taxes.
These projections are based on an assumption that the Affordable Care Act (ACA) will remain in place. When enacted in 2010, the ACA added several years to the life of Medicare’s trust fund. The United States Senate is in the midst of attempting to repeal the ACA, but the Medicare surtax on the wealthy has remained in the new reform bill. This tax applies an additional 0.9 percent levy on upper-income earners to help further finance Medicare.
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Christian Worstell is a health care and policy writer for MedicareSupplement.com. He has written hundreds of articles helping people better understand their Medicare coverage options.
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