This article is reprinted by permission from NerdWallet. At its current pace, Medicare’s Hospital Insurance trust fund will run out of money in 2028, according to the June 2022 Medicare trustees report. That’s a two-year extension on the previous estimate, but experts say it’s still not good news, and the government needs to stop twiddling its thumbs. Here’s what you should know.
What happens if the trust fund is depleted? If the Medicare Hospital Insurance trust fund is depleted, it doesn’t mean Medicare Part A will implode. But the program won’t have enough revenues to cover all operating costs, by a shortfall of about 10% starting in 2029. “This part of the Medicare program won’t be able to make payments to health care providers and health insurers that are due, and those payments will become increasingly delayed over time,” says Matthew Fiedler, a senior fellow with the USC-Brookings Schaeffer Initiative for Health Policy. This backlog could result in a big financial shock to hospitals that rely on Medicare revenues to operate. Ultimately, Fiedler says, “hospitals might rethink the extent to which they want to participate in the Medicare program.” It’s important to understand that Medicare’s Hospital Insurance trust fund doesn’t finance all of Medicare — it funds Medicare Part A, or hospital insurance. Medicare Part B, which covers doctor’s appointments and outpatient care, and Medicare Part D, which covers prescription drugs, are funded mainly out of patient premiums and the government’s general revenues.What are the most likely fixes? There are several ways the government could handle the situation, from tweaking service coverage to redirecting revenues. Here are a few options:Move some Medicare Part A services to Part B Some experts have suggested that the government could shift some post-acute services — such as physical therapy or nursing management after a hospital stay — from Part A to Part B. “That makes the Part A trust fund look better, because you’ve taken some of the expenses off the books,” says Dr. Mark McClellan, the Robert J. Margolis professor of business, medicine and policy at Duke University, who holds a doctorate in economics. “But that’s not really changing the overall cost or sustainability of the program.” For Medicare beneficiaries, this change could mean that some post-acute services that are covered 100% under Part A co …