Medicare HI Trust Fund Solvency Assuming MA Utilization

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Summary

The Hospital Insurance Trust Fund would remain solvent until 2048 if FFS utilization levels were similar to Medicare Advantage utilization levels.

The 2023 Medicare Board of Trustees report projected that the Hospital Insurance (HI) Trust Fund will be insolvent by 2031, heightening stakeholder and policymaker interest in promoting efficiency and preserving quality in Medicare. To investigate how utilization could affect solvency, Avalere estimated HI Trust Fund balances under an alternative scenario that assumes that utilization in fee-for-service (FFS) Medicare, as measured by patient days per user, was at the same level as MA.

The services assessed in the analysis included inpatient, skilled nursing facility (SNF), and home health (HH) services (covered by Part A). This analysis included the change in total Part A spending, the change in the balance of the HI Trust Fund, and the change in the year in which the HI Trust Fund would become insolvent. Avalere developed a model to adjust the actual FFS utilization based on the disease and demographic characteristics of the MA enrollees using these services to account for any discernible differences between MA and FFS beneficiaries.

To conduct this analysis, Avalere leveraged the 100% Medicare FFS claims and Medicare Advantage (MA) claims from Inovalon’s MORE2 registry® for 2018 and 2019. Avalere identified beneficiaries using inpatient, SNF, and HH services from FFS and MA claims data where the beneficiaries had both Part A and Part B enrollment.

Findings

  • MA vs. FFS Utilization Differences: For all Part A services analyzed, MA utilization, as measured by patient days, was lower than FFS. Between 2018 and 2019, the differences between MA and the alternative, utilization-based scenario were 36% for inpatient, 14% for SNF, and 28% for HH.
  • HI Trust Fund Solvency Projection: The HI Trust Fund would remain solvent for an additional 17 years—until 2048—if FFS utilization levels were similar to MA utilization levels.
Figure 1. HI Trust Fund Projections, Current vs. Alternative, 2023–2048
Figure 1. HI Trust Fund Projections, Current vs. Alternative, 2023–2048

To learn more about Medicare HI Trust Fund solvency, connect with us.

Funding for this research was provided by America’s Health Insurance Plans. Avalere retained full editorial control.

Download the related white paper, “Medicare HI Trust Fund Solvency Estimates Assuming MA Utilization Levels.”

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