Projections Methodology and Research Studies
The Office of the Actuary (OACT) regularly produces 75-year projections of Medicare expenditures for the annual report of the Medicare Board of Trustees. The assumptions underlying these long-term projections have evolved over several decades through internal deliberations, the reports of three independent technical panels, ongoing discussions with the Medicare Trustees and their staffs, and the input of various external researchers. A summary of the assumptions and projection methods is regularly described in the Medicare Trustees Report.
Because of the significance of the long-range projections for public policy makers, it is important for the projection assumptions to be as transparent and understandable as possible. The purpose of the projections methodology memorandum is to promote a more complete understanding of the long-range cost growth assumptions by: i) describing the projection challenge, ii) providing a detailed description of the current long-range assumptions, iii) tracing the evolution of the long-range assumptions used in the Trustees Report, and iv) evaluating the strengths and limitations of the current cost growth assumptions. See downloads below.
In appendix C of the “2014 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds,” the Trustees discuss simulations of the impact of the Affordable Care Act (ACA) Medicare payment rate update provisions on Part A provider financial margins. See downloads below for a memorandum which details these simulations.
The OACT regularly conducts research to support its 75-year projections methodology. Findings on that research are provided below in the paper, “Spillovers in Health Care Markets: Implications for Current Law Projections.” Other related research can be found in the papers, "Implications of Time Series Models for Long-Term Projections of Health Expenditures" and "Challenges in Controlling Medicare Spending: Treating Highly Complex Patients." See downloads below.