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Date: April 3, 1995
FOR IMMEDIATE RELEASE 
Contact:  Anne Verano, HCFA  202-690-6145

Medicare Trustees Issue Annual Reports

The Medicare trustees today reported modest improvement in the condition of the Medicare trust funds. The estimated exhaustion date of the Hospital Insurance Trust Fund moved back a year to 2002, based on most probable economic and demographic assumptions.

This compares with last year's estimate that fund exhaustion would occur in 2001, and the estimate of two years ago that depletion would occur in 1999.

However, changes are still needed to protect the solvency of the Hospital Insurance Trust Fund, the trustees said in their annual reports to Congress. The problems should be addressed by specific program legislation as part of broad-based health care reform, they said.

In addition, the trustees recommended that a quadrenniel commission on Medicare be restored to provide advice on improvements in the program. Such commissions have existed previously, but were not reauthorized by the legislation that created an independent Social Security Administration.

HHS Secretary Donna E. Shalala said, "The condition of the Hospital Insurance Trust Fund illustrates again the need for reform of the health care system to reduce the rate of growth in spending."

Medicare hospital insurance helps pay for hospital inpatient care, skilled nursing facility care, hospice care and home health care. The HI trust fund is financed mainly by the Medicare portion of the Social Security payroll tax. The Medicare payroll tax rate of 2.90 percent consists of equal contributions of 1.45 percent from employers and employees.

The other trust fund for Supplementary Medical Insurance helps pay for the services of physicians and other health care professionals, outpatient services, independent laboratory services, and durable medical equipment. The SMI program is financed mostly by general revenues of the government and by premiums paid by beneficiaries. The 1995 premium was set by Congress at $46.10 a month.

The annual reports of the trustees use updated economic and demographic assumptions to estimate the financial status of the trust funds. The reports are presented to Congress.

The six-member boards include four trustees who serve automatically because of their positions: Treasury Secretary Robert E. Rubin, Labor Secretary Robert B. Reich, HHS Secretary Donna E. Shalala, and Social Security Commissioner Shirley S. Chater. Two other members, appointed by the President with Senate confirmation, are Stanford G. Ross and David M. Walker. They serve four-year terms and represent the general public.

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