Insights into Medicare Financial Status and Future Sustainability

1. OFFICE OF THE ACTUARY The Financial Status of Medicare July 14, 2014 Paul Spitalnic CMS Chief Actuary

2. Agenda • Current snapshot and evolution of the program • Different views on Medicare Financial Status • Formal status of trust funds • Relative to other health expenditures • Relative to other federal expenditures • Q&A

3. Medicare enrollment, benefits, and financing

4. Medicare Sources of Non-Interest Income as % of GDP

5. Medicare Spending by Category Total Spending = $10.8B (0.76% of GDP)

6. Note: In 1991 there was a methodological change affecting Part B.

8. Formal Status of Trust Funds • Evaluate HI separately from SMI • HI • Are assets plus projected income adequate to finance anticipated benefit costs? • SMI • Part B account financing set annually • Part D account draws on General Fund of the Treasury on an as needed basis • No long term solvency issues • Growing strain on federal budget

11. Amount of deficit that would be covered by interest earnings and asset redemptions

12. 75-year actuarial balance • Present value of income rate less cost rate • Rates compare income or costs to taxable payroll

22. QUESTIONS ????