Medicare Accounting Facade?

Trustees: Medicare hospital fund extended 12 years

The annual checkup of the government's big benefit programs for the elderly show that the Obama administration's sweeping health care overhaul will extend the life of the Medicare hospital insurance fund by 12 years.

...That improvement was credited to the cost savings that will occur with the passage earlier this year of health care reform.

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."

...Health and Human Services Secretary Kathleen Sebelius, another trustee, told reporters that the trustees assumed current law in making their projections, including a cut in doctor's Medicare payments of 23 percent starting in December.

Congress has for years voted to put more money in the Medicare program to keep such sharp cuts in doctor's payments from occurring.

...An April 22 analysis pointed out that the projected gain of 12 years of additional solvency for Medicare, a figure that was also used in the health care debate, was largely an "appearance," stemming from how Medicare cuts are handled under federal accounting rules. Under the law, savings from those cuts will be used to finance coverage for the uninsured.

"In practice, the improved (Medicare) financing cannot be simultaneously used to finance other federal outlays (such as the coverage expansions) and to extend the trust fund, despite the appearance of this result from the respective accounting conventions," the report said.

A companion report concluded that some of the $575 billion in Medicare savings over 10 years "may be unrealistic" because future Congresses could be pressured to roll back cuts to providers in the health care law.

 Ricardo Alsonso-zaldivar and Martin Crutsinger
Associated Press