Today we get new reports on the health of Social Security and Medicare. Here’s the bottom line on Medicare:
For the 75-year projection period, the HI actuarial deficit has decreased from 1.35 percent of taxable payroll, as shown in last year’s report, to 1.11 percent of taxable payroll. The more favorable outlook is primarily due to (i) lower projected spending….(ii) lower projected Medicare Advantage program costs….and (iii) a refinement in projection methods that reduces assumed per beneficiary cost growth.
I wouldn’t make too much of this, since year-to-year changes are pretty sensitive to economic assumptions and to current law, which can change. In fact, the chart on the right shows just how much future projections rely on planned reductions in the Sustainable Growth Rate formula for payments to doctors, as well as other cost savings mandated by Obamacare. If we stick to our guns on these things, Medicare spending looks fairly restrained in the future. If we don’t, it doesn’t.