An Actuarial Perspective on Proposals to Improve Medicare’s Financial Condition

Mary Downs, Executive Director Mark Cohen, Director of Communications Craig Hanna, Director of Public Policy Cori Uccello, Senior Health Fellow Heather Jerbi, Senior Health Policy Analyst An Actuarial Perspective on Proposals to Improve Medicare’s Financial Condition Medicare plays a critically important role in ensuring access to health care among Americans age 65 and older and certain younger adults with permanent disabilities. Yet, rising health care spending threatens the sustainability of the Medicare program and the overall health system. Moreover, rising health spending threatens the nation’s fiscal health. Provisions in the Affordable Care Act (ACA) have improved Medicare’s financial condition. Nevertheless, putting the country on a more sustainable fiscal path requires additional efforts to slow health spending growth. To this end, debt and deficit reduction proposals put forward by various groups, such as the National Commission on Fiscal Responsibility and Reform, include provisions to control health spending. Related legislation has also been introduced. The American Academy of Actuaries’ Medicare Steering Committee supports continuing efforts by the president and Congress to address these challenges and urges further action to restore the long-term solvency and sustainability of Medicare. To assist in those efforts, this paper outlines many of the Medicare-related provisions in the various debt and deficit reduction proposals. For each proposal, a summary of the key cost, access, and quality issues from an actuarial perspective is provided. In future work, the MARCH 2009 American Academy of Actuaries