Medicare will be bankrupt in nine years.
The 60 Plus Association, an advocacy group that bills itself as "the conservative alternative" to the AARP, has a fondness for golden oldies. The group hired singer Pat Boone as its pitchman in an ad that targets the Patient Protection and Affordable Health Care Act, the health reform bill often called Obamacare approved by Congress in 2010. In the ad, Boone warns seniors of potential dangers in the bill and urges them to call Sen. Sherrod Brown of Ohio. Look-alike versions aired in other states target four other Democratic senators. PolitiFact already has run several of Boone’s claims in the ad through the Truth-O-Meter. A statement that an independent payment advisory board created by the health care act "can ration care and deny certain Medicare treatments" was rated Pants on Fire, as was the claim that the IPAB is "like a Medicare IRS with the power to cut Medicare in order to pay for new government programs." And the statement that the health care law "will cut $500 billion from Medicare" was rated Mostly False. That leaves us with another alarming assertion: "Medicare will be bankrupt in nine years, but Washington politicians, like Sherrod Brown, are ignoring the problem, putting their own re-elections first." The second part of the statement is subjective political rhetoric that we can't rate. We can, however, examine the foundation of the claim about Medicare going bankrupt. PolitiFact Ohio won’t try to predict the future. But the claim about Medicare going bankrupt isn’t a predictions as a result of an ideological debate. Rather, it’s rooted in research and projections by the nonpartisan Congressional Budget Office. 60 Plus cited two reports from the nonpartisan Congressional Budget Office when we asked about the claim. The CBO's "March 2011 Medicare Baseline," 60 Plus said, "estimated that the Hospital Insurance Trust Fund would be exhausted in 2021." Another CBO report, the "Budget and Economic Outlook" for fiscal 2012 to 2022," estimated that the Hospital Insurance Trust Fund would be exhausted by early 2022," it said. That's true -- and it's not what Boone says in the ad. The Hospital Insurance Trust Fund to which the reports refer is one of two separate trust funds run by the federal government for Medicare. This trust fund, which collects most of its money from federal payroll taxes, pays for one of four parts of Medicare, Part A, which covers inpatient hospital care, home health care, and services at skilled nursing facilities and hospices. The other trust fund is the Supplementary Medical Insurance Trust Fund. It is mostly covered by the federal government’s general fund and premiums and pays bills for Medicare Part B, which covers doctor visits and other outpatient costs, and Part D, which covers prescription drugs. Medicare Advantage, or Part C, gives recipients the option to receive care through private insurers. It doesn’t have a trust fund. The Supplementary Medical Insurance fund is in good shape. It is "projected to remain in financial balance for all future years," according to a 2011 report by the fund’s trustees. The Hospital Insurance fund does have big problems, but that's not the same thing as being "bankrupt," a legal term of art that doesn’t apply to federal governmental programs. A report by the Congressional Research Service leaves open the question of what would happen if the Hospital Insurance fund were to run out of money. "There are no provisions in the Social Security Act governing what would happen in such an event," the report says. "There is no authority in law for a general revenue funding of the shortfall. The fund would continue to have payroll taxes credited to it though these would be insufficient to pay all the pending claims." But the CRS report also notes that the Hospital Insurance trust fund has faced a projected shortfall "almost from its inception." In 1970, when the program was only four years old, the insolvency date was 1972. For the next 16 years, trustees expected the fund to be exhausted by the 1990s. Congress repeatedly changed legislation to lower fund spending and keep it from going dry. ("Baseline" projections are made with the assumption that current laws and formulas remain unchanged.) Our colleagues at FactCheck.org wrote in 2009 about a TV ad for another conservative group, Americans for Prosperity, which predicted Medicare would be bankrupt in eight years -- 5 1/2 years from now. They checked a nearly identical claim of bankruptcy by Rep. Paul Ryan a year ago. In both cases, FactCheck said, the claim "goes too far." Again, we won’t try to predict the future. But for this claim, we don’t have to. 60 Plus cited reports showing that Medicare's Hospital Insurance Trust Fund faces insolvency in nine years. And while it’s worth noting that Congress has always pulled the fund from the brink of insolvency, and that insolvency has been forecast almost from the program’s start, that’s an event in the future that we won’t try to predict. What we do know from research that 60 Plus cited is that that Boone’s claim -- that Medicare will be bankrupt in nine years -- takes a projection for one trust fund and applies it to all of Medicare. By doing so, Boone’s claim overstates what the CBO reports forecast. The Hospital Insurance Trust Fund supports just one of the four parts of Medicare. The portions of Medicare that cover regular doctor visits and prescriptions are covered by a different trust fund that trustees say is in good shape. On the Truth-O-Meter, Boone’s claim rates False.
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