Press release

Medicare Trustees Report shows lower spending projections for Medicare Part D

Hospital Insurance Trust Fund Solvent Until 2026

Today, the Medicare Board of Trustees released their annual report for Medicare’s two separate trust funds -- the Hospital Insurance (HI) Trust Fund and the Supplementary Medical Insurance (SMI) Trust Fund. Findings revealed that Part D drug spending projections are lower than in last year’s report because of higher manufacturer rebates, a decline in spending for Hepatitis C drugs, and a slowdown in spending growth for diabetes drugs.

The report also found that the Trust Fund will be able to pay full benefits until 2026, which is three years earlier than last year’s projections, attributable to adverse changes in program income. The Trustees project that total Medicare costs (including both HI and SMI expenditures) will grow from approximately 3.7 percent of GDP in 2017 to 5.8 percent of GDP by 2038, and then increase gradually thereafter to about 6.2 percent of GDP by 2092.

The SMI Trust Fund, which covers Medicare Part B and D, had $88 billion in assets at the end of 2017. Part B helps pay for physician, hospital, home health, and other services for the aged and disabled who voluntarily enroll. It is expected to be adequately financed in all years because premium income and general revenue income are reset annually to cover expected costs and ensure a reserve for Part B costs. However, the aging population and rising health care costs are causing SMI projected costs to grow steadily from 2.1 percent of GDP in 2017 to approximately 3.6 percent of GDP in 2037. Part D provides subsidized access to drug insurance coverage on a voluntary basis for all beneficiaries, as well as premium and cost-sharing subsidies for low-income enrollees.

President Donald J. Trump’s Fiscal Year 2019 Budget, if enacted, would strengthen the fiscal integrity of the Medicare program. CMS continues to utilize all regulatory pathways to strengthen the Medicare program and lower costs for Medicare recipients. Under President Trump’s leadership, CMS has introduced a number of initiatives to strengthen Medicare. The policies in the FY 2019 proposed rules advance CMS’ priority of creating a patient-driven healthcare system with greater price transparency and interoperability. CMS’ Medicare rules create new efficiencies, remove outdated, unnecessary regulations, and let providers spend more time treating their patients. CMS is also strengthening Medicare through increasing choice in Medicare Advantage, where beneficiaries will have access to new benefits in 2019. Last year, CMS lowered the costs that Medicare recipients pay for drugs they receive at hospitals that participate in the 340B program. Because of that change, Medicare recipients will save $320 million of their own money in 2018 alone, and we are continuing to work to advance policies to lower the cost of drugs for seniors.

The Medicare Trustees are: Health and Human Services Secretary, Alex M. Azar; Treasury Secretary and Managing Trustee, Steven Mnuchin; Labor Secretary, Alexander Acosta; and Acting Social Security Commissioner, Nancy A. Berryhill. CMS Administrator Seema Verma is the secretary of the board.

The report is available at https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/ReportsTrustFunds/index.html.