Richard Foster, the chief actuary of the Centers for Medicare & Medicaid, gave a presentation at the American Enterprise Institute today to confirm a disturbing fact. The date at which the Medicare Part A trust fund runs out is closer than we thought. It's due to come in 2024 -- last year, it had been due to come in 2029.
I asked Foster what the effect of the Affordable Care Act was on this. After all, it reduces Medicare spending by $500 billion.
"Under current law," he said, "including the Affordable Care Act, we're estimating that the trust fund would be exhausted in 2024. In the absence of the savings under the Affordable Care Act, a corresponding date of exhaustion would be 2016. So the Affordable Care Act, in the new projection, postpones the exhaustion by eight years. That's down from 12 years in last year's projection."
Why does it save money? In a word, rationing. Why is the projection revised downward? Part of the reason is that the overall economic picture is gloomier than was expected last year.