On May 13, the Centers for Medicare & Medicaid Services (CMS) released the 2011 Annual Report of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds, projecting that Medicare will become insolvent in 2024, five years earlier than previously projected.  Originally, the trustees estimated that the national health care reform law would extend Medicare’s solvency from 2017 to 2029.  The report attributes the new projection to lower-than-anticipated payroll tax revenue and longer life expectancy projections.

From the report:

The Medicare program has two components. Hospital Insurance (HI), or Medicare Part A, helps pay for hospital, home health, skilled nursing facility, and hospice care for the aged and disabled. Supplementary Medical Insurance (SMI) consists of Medicare Part B and Part D. Part B helps pay for physician, outpatient hospital, home health, and other services for the aged and disabled who have voluntarily enrolled. Part D provides subsidized access to drug insurance coverage on a voluntary basis for all beneficiaries and premium and cost-sharing subsidies for low-income enrollees. Medicare also has a Part C, which serves as an alternative to traditional Part A and Part B coverage. Under this option, beneficiaries can choose to enroll in and receive care from private “Medicare Advantage” and certain other health insurance plans that contract with Medicare. The costs for such beneficiaries are generally paid on a prospective, capitated basis from the HI and SMI Part B trust fund accounts.

Full Report: Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds (PDF | 2.67 MB)

Centers for Medicare and Medicaid. (2011). Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds.