Fact or Fiction – “Medicare is going broke so the hospital won’t be profitable and will end up costing the county money.”

We rate this MOSTLY FALSE 

Medicare can never “go broke” because it has a continual stream of income from Social Security taxes; although, Medicare A, the portion that reimburses hospitals, is projected to run out of reserves in 2028 and have a cash flow shortfall of 11% increasing to 20% by 2050, mainly due to Baby Boomers. After 2050, it is projected to move back to having surplus.[1] The shortfall only effects costs pertaining to people staying in the hospital (Medicare A), not physician or outpatient costs (Medicare B) or prescription drug costs (Medicare D). [2]

Impact on County Mill Levy:  Neutral. 

Assuming Congress does nothing to prevent the shortfall, under the worst case scenario where Medicare can only pay 80% of its obligations, our Critical Access Hospital would be receiving $2.4 million (vs current projections of  $3 million) more from Medicare each year than we do today, which would be enough for the CAH to cover expenses.

Probability of adverse impact:  15%

There is always the risk that Congress decides to leave millions of senior citizens vulnerable and decides not to do anything to cover the short fall, and that the assumptions used in the financial projections change, which could either increase or decrease the amount of money the CAH brings in.

[1] http://www.factcheck.org/2016/11/broke-and-because-of-aca/

[2] http://www.cbpp.org/research/health/medicare-is-not-bankrupt

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