WASHINGTON — Medicare is in better shape because of President Barack Obama’s sweeping health care overhaul, the government said Thursday, and the hospital fund for elderly Americans will stay afloat a dozen years longer than earlier forecast — but it depends on the program achieving big cost-cutting savings that even a top Medicare expert calls highly doubtful.
In what amounted to a dissenting opinion, Medicare actuary Richard Foster warned that the report’s financial projections “do not represent a reasonable expectation.”
The conflicting renderings by federal officials centered on the annual report of the trustees for Medicare and Social Security, released Thursday. It found that the Medicare Hospital trust fund will not be exhausted until 2029, a dozen years beyond what was estimated last year.
The recession, however, has worsened the near-term outlook for the Social Security trust fund, the report said.
The trustees said the Social Security program is projected to pay out more in benefits than it collects in taxes for the first time this year and next year. The Social Security trust fund is expected to be exhausted in 2037, the same date as in last year’s report.
The report noted that achieving the health care savings needed to extend the life of the Medicare trust fund “may prove difficult and will probably require that payment and health care delivery systems be made more efficient than they are currently.” The trustees also said their projections “should be interpreted cautiously.”
Foster, Medicare’s chief actuary, said in a statement included in the report that the Medicare savings might not be realistic. He said the projections were based on current law, which calls for payments to doctors to be cut by 23 percent in December and by a combined 30 percent over the next three years, an outcome that Foster called “an implausible result.”
Congress has for years voted to put more money in the Medicare program to keep such sharp cuts in doctor’s payments from occurring.
Foster said the report also makes overly optimistic assumptions about the amount of savings that hospitals and other major providers will be able to achieve by operating more efficiently.
“For these reasons, the financial projections shown in the report for Medicare do not represent a reasonable expectation for actual program operations in either the short range . . . or the long range,” Foster wrote.
The administration delayed issuance of the trustees report, which normally comes out in the spring, in order to recalculate projected spending estimates based on the changes the new health care law brought about or will bring about in the future.
Treasury Secretary Timothy Geith ner, the head of the trustees panel, said that while the new report showed “very positive developments” from the new health care law, it also underscored “that we must continue to make progress addressing the financing challenges” facing Medicare and Social Security.
