Susan Walsh, Associated Press
FILE - In this April 10, 2019 file photo, a sign is shown during a news conference to reintroduce "Medicare for All" legislation, on Capitol Hill in Washington. The financial condition of the government’s bedrock retirement programs for middle- and working-class Americans remain shaky, with Medicare pointed toward insolvency by 2026. That’s the word from the latest report by the government’s overseers of Medicare and Social Security, which paints a sobering picture of the programs, though it’s relatively unchanged from last year’s update. Social Security would become insolvent in 2035, one year later than previously estimated.

SALT LAKE CITY — In just seven years, if Congress does not intervene, Medicare’s Part A hospital insurance will no longer be able to pay full benefits for inpatient hospital services, hospice care, and the home health and skilled nursing care it covers when they’re needed following hospitalization.

The program isn't going bankrupt, as some headlines have blared, but the cost is projected to outpace available funds, creating a shortfall that if not addressed by Congress would force the program to pay less for covered services.

The new 2019 Medicare Trustees Report estimates that in 2026, the Hospital Insurance Trust Fund, which reimburses providers for Part A services, will be able to cover about 89 percent of the amount that will be owed. And the gap between funding and expenditure will keep growing, it said.

"It should not surprise anyone here today to know that Medicare's fiscal circumstances remain a serious matter for the country and for taxpayers," said Joseph Antos, an American Enterprise Institute scholar, during a discussion AEI hosted in Washington, D.C. Tuesday.

"Such a large increase in spending represents a serious and growing fiscal challenge. Trustees have repeatedly warned that Medicare finances are fundamentally unsound," he said.

The Centers for Medicare and Medicaid Services, the agency within the Department of Health and Human Services that administers Medicare, said the numbers are driven in part by "faster Medicare population growth and increases in the volume and intensity of healthcare services."

The Medicare Board of Trustees is required to provide a 75-year projection on the fiscal health of that Part A Hospital Insurance Trust Fund and the Supplementary Medical Insurance Trust Fund, from which Medicare’s Part B and Part D expenses are paid.

While Medicare Part A covers hospital expenses, Part B covers physician, outpatient hospital, home health and other services and Part D helps cover the cost of medication. People enroll in B and D and pay premiums. A separate Medicare program, Part C, or "Medicare Advantage," is an alternative to parts A and B managed by private insurance companies under contract with Medicare.

In order to avoid underestimating the shortfall, the report's Part A estimate does not account for payment reductions that would be needed if the trust fund was depleted. A "critical function" of the annual report is to alert lawmakers to "the size of any trust fund deficits that would need to be resolved to avert program insolvency."

"Insolvency in this context means that the hospital trust fund would not be able to pay all its bills," said AEI panelist Robert Moffit of The Heritage Foundation. The program will "not go under, it will not collapse. It simply will not pay all of the promised benefits," he added.

Lawmakers can make adjustments to avert a shortfall, either by making changes to the program, increasing funding in the federal budget or raising the payroll tax directed to Medicare. Congress has never allowed the program to be insolvent, so it's not clear what would happen if it did — whether service providers would have to eat the difference between full and partial reimbursement or whether beneficiaries could be required to pay a larger share of the program's costs through higher deductibles, copayments and coinsurance.

As baby boomers age, total Medicare costs for both trust funds are expected to grow from 3.7 percent of GDP in 2018 to 5.9 percent by 2038. After that, it will grow more gradually to about 6.5 percent of GDP by 2093. That increase will be due to more people aging into Medicare and "increases in the volume and intensity of healthcare services," according to the Centers for Medicare and Medicaid Services.

The two trust funds that together finance for Medicare's parts operate differently. Funding for Part B is determined each year to be sure costs are covered and a reserve maintained. The report predicts those costs will grow, too, from 3.2 percent of GDP to 3.7 percent in 2038. But the report's projection of cost for Part D is lower than last year. Antos said parts B and D will "remain solvent indefinitely."

Joe Spitalnic, a Medicare program actuary, said one way to address the deficit would be to increase the fund's income rate by .91 percent by raising the payroll tax from 2.9 percent to 3.8 percent. But several AEI panelists noted that tax increases are hard to get passed.

In a news release about the trustees report, the agency hailed President Trump's 2020 budget proposal, noting that under his leadership, the agency has created initiatives "to strengthen and protect Medicare." Among its priorities, the release said, is using competition to give patients more choice.

"In particular, CMS is strengthening Medicare through increasing choice in Medicare Advantage and adding supplemental benefits to the program offering more care options for people with diabetes; providing new telehealth services; and lowering prescription costs for seniors. CMS is also continuing work to advance policies to increase price transparency and help beneficiaries compare costs across different providers."

The Medicare trustees' report comes at a time when Democrats seem to be lining up behind various versions of what has been called "Medicare for all," including several Democrat presidential hopefuls.

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Vox News this week reported that "Last year, dozens of Democratic candidates ran — and won — on a promise to fight to give all Americans access to government-run health care. A new Medicare-for-all bill in the House already has more than 100 co-sponsors. Many of the 2020 Democratic presidential candidates have endorsed the idea." The article noted "more than half a dozen proposals in Congress, which all envision very different health care systems."

A companion federal report by Social Security's trustees said that starting in 2035, recipients of that program would receive just three-fourths of their monthly benefits unless Congress intervenes.