CMS's Verma rips expansion plans after gloomy Medicare forecast

The Trump administration’s top Medicare official used an annual report on the program’s fiscal outlook to attack proposals by some Democrats to expand government health-care coverage to all Americans.

The federal trust fund that finances much of the health-care program for the elderly and disabled is projected to run out in 2026, the same year forecast in the most recent projections published in June, trustees for Medicare said in a report Monday.

Related: Social Security’s about to pay out more than it takes in — for the first time in decades

“At a time when some are calling for a complete government takeover of the American health-care system, the Medicare trustees have delivered a dose of reality,” Seema Verma, administrator of the Centers for Medicare and Medicaid Services, said in an emailed statement.

The yearly gauges of Medicare’s fiscal health are wonky, technical analyses, watched mostly by economists, actuaries and policymakers. But the release of the report also gives politicians an opportunity to use it as a rhetorical weapon.

Verma wasted no time. Moments after the official report was released, her office released a statement criticizing the idea of Medicare for All — a proposal the report doesn’t even mention. Senator Bernie Sanders of Vermont and several other candidates running for the 2020 Democratic nomination want to expand a version of the program to provide free health care to all Americans.

“Stripping around 180 million Americans of private coverage and adding them to Medicare won’t fix the problem” of Medicare’s fiscal outlook, Verma said.

‘Harmful policies’

Democrats blamed Republicans for the looming Medicare shortfall. The trust fund “has not recovered from years of Republicans’ harmful policies,” Representative Richard Neal of Massachusetts, chairman of the House Ways and Means Committee, said in a statement. “Americans pay into these essential programs throughout their working lives, and they expect to receive the benefits they’ve earned.”

The updated projection arrives as Medicare takes a central role in the debate about the future of American health care. Republicans and some executives in the health-insurance industry warn that such a proposal could disrupt the economy and force roughly half the American population from the employer health plans they currently have.

The prospect of Medicare for All replacing private insurance, however remote, helped send health stocks tumbling last week. The selloff followed an upbeat earnings report by UnitedHealth Group Inc., the largest and first health-insurance company to report first-quarter results.

UnitedHealth Chief Executive Officer Dave Wichmann said Medicare for All would be a “wholesale disruption of American health care” that would destabilize the nation’s health system and incur a severe economic cost.

Medicare provides government health insurance to about 60 million Americans who are over 65 or disabled, at a cost of about $700 billion last year. The part of the program that pays for hospitalization, known as Part A, relies on a trust fund replenished by dedicated payroll taxes.

As expenditures from that trust fund exceed tax revenue, the amount available for Medicare to pay hospitals gradually decreases.

The trust-fund-linked hospital payments account for less than half of Medicare’s total spending. Other parts of the Medicare program that pay for physicians and drugs don’t depend on the trust fund. They’re financed through a combination of general tax revenue and premiums paid by beneficiaries.

Read more: 

• Medicare for All: Where the 2020 presidential candidates stand
• 4 approaches to expanding health care (and only one is Medicare for All)
• Medicare for All sound too extreme? Try plan B: Medicare for America

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