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OFFICE OF THE ACTUARY. The Financial Status of Medicare Presentation for the American Enterprise Institute June 3, 2013. Paul Spitalnic, ASA Acting Chief Actuary. Medicare enrollment, benefits, and financing. 2012 Medicare experience ($ billions). - PowerPoint PPT PresentationTRANSCRIPT
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OFFICE OF THE ACTUARY
The Financial Status of MedicarePresentation for the American Enterprise Institute
June 3, 2013
Paul Spitalnic, ASAActing Chief Actuary
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Medicare enrollment, benefits, and financing
Hospital Insurance (HI)
Supplementary Medical
Insurance (SMI) Enrollment in CY 2012: Total .......................................... Proportion with services ...........
50 million 22%
Part B: 46 million Part D: 37 million Part B: 87% Part D: 86%
Benefits* ...................................... * Subject to certain
deductible and coinsurance requirements
Inpatient hospital care Skilled nursing care Home health care (post-institutional) Hospice care
Part B: Physician services Outpatient hospital services Home health care (general) Other services, e.g. Diagnostic tests Medical equipment Ambulance
Part D: Prescription drug benefit
CY 2013 Financing .....................
HI tax on covered earnings:
1.45% payable by employees and employers, each
2.90% payable by self-employed Following elimination of HI contribution base
(effective 1994), HI tax applies to all earnings in covered employment
Tied to worker income in 2013 and later
Revenue from income taxation of OASDI benefits (portion between 50% & 85%)
Part B premiums and general revenue transfers: $104.90 standard monthly premium Tied to beneficiary income in 2007 and later Fees on manufacturers, importers of
brand-name Rx drugs General revenues cover 74% of costs
Part D drug premiums, general revenues, and State transfers: Base premium in 2013 is $31.17; average
premium is about $30; covers 25.5% of standard benefit costs, 14% of total costs
Tied to beneficiary income in 2011 and later State payments on behalf of certain
beneficiaries cover about 12% of costs General revenues cover 74% of costs
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2012 Medicare experience ($ billions)
2013 Report 2012 Report DifferenceHI
Income $243.0 $241.5 $1.5
Expenditures $266.8 $270.4 -$3.6
Surplus/(Deficit) -$23.8 -$28.9 $5.1
SMI - Part B
Income $227.0 $230.0 -$3.0
Expenditures $240.5 $246.9 -$6.4
Surplus/(Deficit) -$13.5 -$16.9 $3.4
SMI - Part D
Income $66.9 $68.5 -$1.6
Expenditures $66.9 $68.8 -$1.9
Surplus/(Deficit) $0.0 -$0.3 $0.3
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1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
$0
$100
$200
$300
$400
$500
Short-range HI income and outgo (In billions)
Calendar year
In-come
Outgo
Note: Projections are based on the intermediate assumptions from the 2013 Trustees Report.
Historical Esti-mated
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1970 1980 1990 2000 2010 2020 20300%
50%
100%
150%
200%
HI fund ratio(Assets at beginning of year as percentage of annual
expenditures)
Beginning of January
Trus
t fu
nd r
atio
Note: Projections are based on the assumptions from the 2013 Trustees Report.
Assets
Historical Estimated
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1967 1977 1987 1997 2007 2017 2027 2037 2047 2057 2067 2077 20870%
2%
4%
6%
8%
Calendar year
Cost Rate
Note: Projections are based on the intermediate assumptions from the 2013 Trustees Report.
Long-range HI income and cost rates (As a percentage of taxable payroll)
Historical Estimated
Deficit
Income Rate
Amount of deficit that would be covered by interest earnings and asset redemptions
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75-year actuarial balance
• Present value of income rate less cost rate– Rates compare income or costs to taxable payroll
75-year PV 2013 Report 2012 ReportIncome rate 3.83% 3.86%
Cost rate 4.94% 5.21%
Actuarial balance -1.11% -1.35%
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Factors of change in 75-year actuarial balance
Actuarial balance – 2012 report -1.35%
Changes:
a. Valuation period -0.03%
b. Base estimate 0.05%
c. Private health plan assumptions 0.07%
d. Hospital assumptions 0.02%
e. Other provider assumptions 0.11%
f. Economic and demographic assumptions 0.02%
Net effect of changes 0.24%
Actuarial balance – 2013 report -1.11%
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1967 1977 1987 1997 2007 2017 2027 2037 2047 2057 2067 2077 2087
-2%
0%
2%
4%
6%
8%
10%
Calendar year
Historical Estimated
Cost Rate
Income Rate
Note: Projections are based on the intermediate assumptions from the 2013 Trustees Report.
Long-range HI income and cost rates,2013 Report compared to 2012 Report
2012 TR
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1967 1977 1987 1997 2007 2017 2027 2037 2047 2057 2067 2077 2087
-2%
0%
2%
4%
6%
8%
10%
Calendar year
Historical Estimated
Cost Rate
Cost rate under il-lustrative alternative
Income Rate
Note: Projections are based on the intermediate assumptions from the 2013 Trustees Report.
Long-range HI income and cost rates,current law and illustrative alternative
2012 TR
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1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022$0
$100
$200
$300
$400
$500
SMI Part B income and outgo (In billions)
Calendar year
Income
Outgo (Current Law)
Note: Projections are based on the intermediate assumptions from the 2013 Trustees Report.
Historical Estimated
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19901992199419961998200020022004200620082010201220142016201820202022$0
$100
$200
$300
$400
$500
SMI Part B income and outgo (In billions)
Calendar year
Income
Outgo (Current Law)
Note: Projections are based on the intermediate assumptions from the 2013 Trustees Report.
Historical Estimated
Outgo (Illustr. Alt.)
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2004 2006 2008 2010 2012 2014 2016 2018 2020 2022$0
$50
$100
$150
$200
SMI Part D income and outgo(In billions)
Calendar YearNote: Projections are based on the intermediate assumptions from the 2013 Trustees Re-port.
Outgo
Income
Historical Estimated
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1960 1980 2000 2020 2040 2060 2080 2100 21200%
1%
2%
3%
4%
5%
SMI expenditures and premium income [As a percentage of Gross Domestic Product
(GDP)]
Calendar YearNote: Projections are based on the intermediate assumptions from the 2013 Trustees Re-port.
Historical Estimated
Part B ex-penditures
Part D ex-penditures
Totalexpenditures
B
D
Totalpremiums
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SMI change from 2012 report
2013 Report 2012 ReportPart B
2012 % of GDP 1.51% 1.58%
2085 % of GDP 2.56% 2.52%
Part D
2012 % of GDP 0.45% 0.45%
2085 % of GDP 1.42% 1.50%
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2000 2010 2020 2030 2040 2050 2060 2070 2080 2090
-2%
0%
2%
4%
6%
8%
10%
12%
Medicare expenditures as a percentage of GDP under current law and illustrative alternative projections
Calendar year
Current Law
Note: Projections are based on the intermediate assumptions from the 2013 Trustees Report.
Alternative to SGR,Productivity Adjustments, and IPAB
Illustrative alternative to current law assumes:- Physician payment updates based on Medicare Economic In-dex- Productivity adjustments to other provider updates are phased out over 2020-2034- IPAB provisions do not apply
Note: This is an illustration, not a recommendation
6.5%
9.8%
Alternative to SGR 7.2%
3.7%