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Medicare's Fiscal Health Worse Than Expected

  • April 2nd, 2003

Medicare''s Hospital Insurance (HI) Trust Fund will be exhausted in 2026, four years earlier than was predicted last year, according to the annual report released by the Medicare Board of Trustees.

The Medicare trustees said that the declining financial outlook was due to lower-than-expected revenues and higher-than-expected hospital spending in 2002. Without changes in the Medicare program, closing the projected HI gap between revenues and expenditures would require that benefits be reduced by 42 percent, or income from the payroll tax would need to be increased by 71 percent, the report said.

The report also projects rapidly increasing costs in the Supplementary Medical Insurance (SMI) Trust Fund, which covers physician visits and other outpatient services. These increases will likely result in higher beneficiary premiums and co-pays in Medicare''s Part B program, the trustees said.

The trustees called for changes to address the predicted long-term fiscal problems facing Medicare.

For the Department of Health and Human Services news release and a link to the trustees'' report, go to: http://www.hhs.gov/news/press/2003pres/20030317.html

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Last Modified: 04/02/2003

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