Medicare’s Trustees reported May 31 that the program’s Part A Trust Fund would be financially solvent until 2026, two years later than estimated last year, but the Acting Chief Actuary for the Centers for Medicare & Medicaid Services says the financial outlook for the program is far from certain. Paul Spitalnic said provisions in the health care reform law reducing Medicare payments based on improvements in productivity may not be sustainable due to the labor-intensive nature of medical services, raising program spending beyond that estimated in the report.  

Mirroring statements made by the trustees, Spitalnic said that without unprecedented changes in health care delivery systems and payment mechanisms, the prices paid by Medicare for health services are very likely to fall increasingly short of the costs of providing these services. By the end of the long-range projection period, Medicare prices for numerous services would be less than half of their level without consideration of the productivity price reductions. Medicare prices would be considerably below the current relative level of Medicaid prices, which have already led to access problems for Medicaid enrollees, and far below the levels paid by private health insurance, Spitalnic said.  

"Well before that point, Congress would have to intervene to prevent the withdrawal of providers from the Medicare market and the severe problems with beneficiary access to care that would result. Overriding the productivity adjustments, as Congress has done repeatedly in the case of physician payment rates, would lead to substantially higher costs for Medicare in the long range than those projected under current law,” he said.  

Spitalnic also said the trustees’ financial projections also assume Congress would not intervene to prevent a 25 percent pay cut for physicians due in 2014, which he called “an implausible expectation.”