At first glance, the conclusions in the 2012 Medicare Trustees Report sound scary. The financial overseers of the program estimate that Medicare Part A, which covers hospital costs, will become insolvent in 2024 and that the program "is not adequately financed over the next 10 years."
But the dire-sounding predictions also included some better news. The trustees said Medicare Part A's expenditures in 2011 were lower than they previously estimated. However, trustees also recognize that the projected date of insolvency is "highly uncertain."
In fact, in their 2009 report, the trustees predicted insolvency by 2017. And in the 1998 report, the trustees said the year of insolvency would be 2008.
"The problem with the trustees' report is it's always Chicken Little, the sky is falling," says Joe Baker, president of the Medicare Rights Center (medicarerights.org), a not-for-profit advocacy and consumer education organization. In fairness to the trustees, their predictions are based on what will happen if the current laws and circumstances that are in effect when they issue their reports continue unchanged. Over the years, Congress has used the trustees' analysis as a spur to change the laws to try to ward off, or at least push back, insolvency.
Aside from the contentious political battle of whether Medicare will survive in its current form, many recipients aren't taking advantage of new benefits that could keep them healthy and actually save Medicare money. For example, several preventive services are available during a free annual wellness visit. But a new survey found that 68 percent of Medicare recipients said either they'd never heard of the wellness visit or weren't sure if they'd heard of it.
"These benefits are new under the Affordable Care Act, so it's going to take time for people to understand them and for providers to understand them as well," Baker says. The wellness visits are "a win-win situation" for the patient and for Medicare, he says. "They can prevent further illness and keep costs low and keep quality of life high."
Even in the doomsday scenario in which Medicare becomes insolvent, beneficiaries would still be covered -- only less so. The trustees said insolvency would mean Medicare Part A would be able to pay only 87 percent of estimated expenditures in 2024.
As for Medicare Part B (which covers doctor's visits) and Part D (the prescription drug plan), the trustees said they are "adequately financed over the next 10 years and beyond."