Health Reform Strengthens Medicare, Doesn’t “Rob” It

August 15

The 2010 health reform law (the Affordable Care Act, or ACA) has significantly improved Medicare’s long-term financial outlook, as we have previously pointed out. Recent claims that health reform “robs Medicare” and does not “shore up Medicare’s finances” are flatly false, as the recent report of the program’s trustees shows.

The Congressional Budget Office estimates that the ACA will reduce Medicare’s projected spending by $716 billion over the 2013-2023 period. As John McDonough of Harvard’s School of Public Health explains: “None of these reductions were financed by cuts to Medicare enrollees’ eligibility or benefits; benefits were improved in the ACA. Cuts were focused on hospitals, health insurers, home health, and other providers.”

Medicare’s trustees confirm that health reform has improved the program’s finances: “The financial status of the HI [Hospital Insurance] trust fund was substantially improved by the lower expenditures and additional tax revenues instituted by the Affordable Care Act.” (See page 4 here.)

In their annual report issued this spring, the trustees estimate that the Medicare hospital insurance program now faces a shortfall over the next 75 years equal to 1.35 percent of taxable payroll — that is, 1.35 percent of the total amount of earnings that will be subject to the Medicare payroll tax over this period. This is much less than the size of the shortfall that the trustees estimated before the enactment of health reform: 3.88 percent of taxable payroll (see chart).



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http://www.offthechartsblog.org/health-reform-strengthens-medicare-doesnt-rob-it/