Medicare Trustees: Medicare is Growing Stronger, with Help from the Affordable Care Act

Today, the Medicare Trustees reported some good news for seniors and taxpayers: The Medicare program will be solvent through 2026, nearly a decade longer than projected at the time of passage of the Affordable Care Act. This is 2 years longer than projected last year. Their annual report also shows that the long run actuarial deficit in the Hospital Insurance Trust Fund – a measure of its long-term fiscal health – has been cut by more than 70 percent since enactment of the health care law. The long-run Medicare deficit has fallen from 3.88 percent of taxable payroll in the 2009 Trustees Report to 1.11 percent in this report.

These long-run gains are matched by short-term relief: the Trustees also project that the Part B premium will not increase between 2013 and 2014, keeping out-of-pocket costs for beneficiaries down. Medicare cost growth has remained at historically low levels over the past three years even as new benefits for preventive care and prescription drugs have helped tens of millions of beneficiaries access care at lower cost. The law reduces prescription drug costs by closing the donut hole, a policy that has already saved more than 6 million seniors more than $700 each. And more than 32 million seniors have accessed a free preventive service under the law, helping them stay healthy and avoid future illness.

This news comes on the heels of a string of reports of good news for Medicare, for seniors, and for overall health care costs. This morning, USA Today reported on how Affordable Care Act is driving innovation across the health industry by the creation of new care models, new payment incentives, and greater efficiency by health care providers – improvements that will benefit all health care consumers. New care models like Accountable Care Organizations reward providers for managing the quality and costs of their patients across all settings over time –more than 250 of these organizations area already serving more than 4 million Medicare beneficiaries. Payment incentives to focus on quality are showing results – there were about 70,000 fewer unneeded hospital stays in Medicare last year. And our data and health information technology initiatives are driving a wave of innovation as entrepreneurs and innovators develop and deploy new digital tools to help clinicians deliver better care across the country.

We are focused on making sure these good trends continue. The President’s budget includes policies to further strengthen Medicare and lower health cost growth, resulting in savings for families and government alike. And we’ll continue to take actions to support innovation and improve quality. Nurturing these developments is essential to supporting the Medicare program into the next decade and beyond. 

Jeanne Lambrew is the Deputy Assistant to the President for Health Policy. Gene Sperling is the Director of the National Economic Council and Assistant to the President for Economic Policy.