Medicare’s hospital insurance fund will face shortfall by 2026

The latest report from Medicare trustees accelerated the timeline for the program’s hospital insurance fund being depleted to 2026—three years earlier than their previous report projected.

The annual report often leads to confusion, as news stories will often refer to the 2026 date as the time Medicare will become “insolvent”—except the fund would still be paying out 90 percent of its scheduled benefits. Economist Dean Baker of the liberal-leaning Center for Economic and Policy Research wrote that news organizations like the Associated Press should refer to this as a shortfall.

One of the reasons the report cites for pushing up this shortfall date are changes affecting the Affordable Care Act (ACA) favored by President Donald Trump’s administration. With the elimination of the individual mandate in the 2017 tax cut law, the number of uninsured Americans is expected to rise, which in turn will lead to more uncompensated care payments to hospitals.

Democrats used those conclusions to blame Trump and Republicans in Congress for Medicare’s financial situation.

“This report should eliminate any doubt that Trump’s tax law yanked Medicare closer to insolvency,” said Sen. Ron Wyden, D-Oregon, the top Democrat on the Senate Finance Committee. “Between reviving junk insurance plans, sending premiums into the stratosphere, and doing serious damage to Medicare’s finances, the president’s rap sheet on health care gets worse by the day.”

Since Trump took office, Congress also repealed the ACA’s Independent Payment Advisory Board. This never-convened panel was meant to develop ways to extend Medicare’s solvency and slow cost growth in the program, but had been falsely labeled a “death panel” during the debate over the ACA’s passage.

Both Democrats and Republicans targeted the program for elimination in the years since the ACA became law. Without it in place, Medicare trustees said its projections for “current-law spending” increased.

Republicans reacted to the report by calling it “concerning but not surprising.”

“Medicare has long needed reforms to ensure a strong fiscal future,” House Energy and Commerce Committee Chairman Greg Walden, R-Oregon, and Health Subcommittee Chairman Michael Burgess, MD, R-Texas, said in a statement. “It is important Congress works together, and we stand ready to find ways to put the program on more fiscally sound footing.”