Health Care Financing Administration's Chief Actuary Explains Improved Medicare Picture Under Balanced Budget Act Provisions

Richard S. Foster, the Chief Actuary of the federal Health Care Financing Administration, presents a financial status report on the Medicare program in the March/April issue of Public Health Reports. The projections described in the article are the same information that the new National Bipartisan Commission on the Future of Medicare will receive when it begins its work shortly.

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The picture that emerges, now that Congress has enacted the Balanced Budget Act of 1997, provides a more positive outlook from the dire predictions of a year ago. Current projections are for program savings of $150 over the next five years.

Using a moderate set of economic and demographic assumptions about the future, Mr. Foster shows that without corrective action, the Medicare Hospital Insurance fund would have been depleted in approximately 2001. The Balanced Budget Act postpones the projected depletion of the Hospital Insurance trust fund from 2001 to 2010, allowing time for the nation's policy makers to find ways to address the longer-term financial problems facing Medicare.

The following chart from Foster's article shows the relationship between income and expenditures for the Hospital Insurance fund through 1996 and projections through the year 2010. (Tiff file available from Janice Lesniak, Public Health Reports 617-565-1441)

CONTACT: Richard S. Foster, Chief Actuary, Tel. 410-786-6374; fax 410-786-1295; e-mail.

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