Actuarial status of the HI and SMI Trust Funds

This article is adapted from the Summary of the 1985 Annual REPORTS of the Medicare Board of Trustees. It presents the actuarial status of the Hospital Insurance (HI) and the Supplementary Medical Insurance (SMI) Trust Funds. Two actions favorably affecting the financial status of the HI Trust Fund have occurred since the publication of the 1984 REPORTS: (1) Fiscal year 1986 hospital payment rates will continue at the same level as in fiscal year 1985, and (2) the level of the annual increase in the rates that can be granted without specific justification has been reduced. Despite these two actions, the Board found that the present financing schedule is barely sufficient to ensure payment of benefits through the late 1990's if the assumptions underlying the estimates are realized. The Board found the SMI program to be financially sound, but it noted with concern the rapid growth in the cost of the program. For both HI and SMI, the Board recommends that Congress consider ways to curtail the rapid growth in program costs.