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Annual report of the Board of Trustees of the Federal Hospital Insurance Trust Fund : communication from the Board of Trustees, Federal Hospital Insurance Trust Fund PDF

112 Pages·1997·6.6 MB·English
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Preview Annual report of the Board of Trustees of the Federal Hospital Insurance Trust Fund : communication from the Board of Trustees, Federal Hospital Insurance Trust Fund

105th Congress, 1st Session House Document 105-73 THE 1997 ANNUAL REPORT OF THE BOARD OF TRUST- EES OF THE FEDERAL HOSPITAL INSURANCE TRUST FUND COMMUNICATION FROM THE FISCAL ASSISTANT SECRETARY, THE BOARD OF TRUSTEES, FEDERAL HOSPITAL INSURANCE TRUST FUND TRANSMITTING THE 1997 ANNUAL REPORT OF THE BOARD OF TRUSTEES OF THE FEDERAL HOSPITAL INSURANCE TRUST FUND, PURSUANT TO 42 U.S.C. 401(c)(2), 1395i(b)(2), AND 1395t(b)(2) — April 24, 1997. Referred to the Committee on Ways and Means and ordered to be printed 105th Congress, 1st Session House Document 105-73 THE 1997 ANNUAL REPORT OF THE BOARD OF TRUST- EES OF THE FEDERAL HOSPITAL INSURANCE TRUST FUND COMMUNICATION FROM THE FISCAL ASSISTANT SECRETARY, THE BOARD OF TRUSTEES, FEDERAL HOSPITAL INSURANCE TRUST FUND TRANSMITTING THE 1997 ANNUAL REPORT OF THE BOARD OF TRUSTEES OF THE FEDERAL HOSPITAL INSURANCE TRUST FUND, PURSUANT TO 42 AND U.S.C. 401(c)(2), 1395i(b)(2), 1395t(b)(2) — April 24, 1997. Referred to the Committee on Ways and Means and ordered to be printed U.S. GOVERNMENT PRINTING OFFICE 40-120 WASHINGTON : 1997 LETTEROFTRANSMITTAL BOARDOFTRUSTEESOFTHE FEDERALHOSPITALINSURANCETRUSTFUND Washington,D.C.,April24,1997 HONORABLENewtGingrich SpeakeroftheHouseofRepresentatives Washington,D.C. HONORABLEAlbert;Gore,Jr. PresidentoftheSenate Washington,D.C. GENTLEMEN: Wehavethehonoroftransmittingtoyouthe1997AnnualReportoftheBoardofTrusteesoftheFederal HospitalInsuranceTrustFund(the32ndsuchreport),incompliancewiththeprovisionsofsection 1817(b)oftheSocialSecurityAct. Respectfully, ^0 ^^LA RobertE.Rubin,Secretaryof Qyi^^a.A.Metzler,Acting Treasury,andManaging Labor,andTrustee. TrusteeoftheTrustFund. ^mJ^ DonnaE.Shalala,Secretaryof J.Callahan,ActingCommissioner HealthandHumanServices, ofSocialSecurity,andTrustee. andTrustee. )^-^ StephenG.KeUison,Trustee. MarilynMoon,Trustee BruceC.Vladeck,Administrator oftheHealthCareFinancing Administration,andSecretary, BoardofTrustees. CONTENTS OVERVIEW I. 1 A. Introduction 1 B. Highlights 2 C. 1996 Trust Fund Financial Operations 4 D. Economic and DemographicAssumptions 7 E. 10-YearActuarial Estimates (1997-2006) 9 F. 75-YearActuarial Estimates (1997-2071) 12 G. Conclusion 15 ACTUARIALANALYSIS II. 17 A. MedicareAmendments Since the 1996 Report 17 B. Nature ofthe Trust Fund 17 C. Operations ofthe Trust Fund, Fiscal Year 1996 21 D. Expected Short-Range Operations and Status ofthe Trust Fund 26 E. Actuarial Status ofthe Trust Fund 40 F. Actuarial Methodology andPrincipalAssumptions forthe Hospital Insurance Cost Estimates 48 1. Assimiptions 48 2. Program CostProjection Methodology 48 3. FinancingAnalysis Methodology 57 4. Projections UnderAlternativeAssumptions 59 G. Long-Range SensitivityAnalysis 61 1. Real-Wage Differential 61 2. ConsumerPrice Index 63 3. Real-Interest Rate 64 4. Health Care CostFactors 65 III. APPENDICES 67 A. Actuarial Balance Underthe ModifiedAverage-Cost Method 67 , B. Long-Range Estimates ofMedicare Incurred Disbursements as a Percentage ofGross Domestic Product 70 C. Medicare Cost Sharing and PremiumAmounts 72 D. Announcement ofthe Medicare PartA Inpatient Hospital Deductible and Hospital and Extended Care Services CoinsuranceAmounts, for CalendarYear 1997 ... 74 E. Announcement ofthe Medicare PartAMonthly Premium Rate forthe UninsuredAged and for Certain Disabled Individuals who have Exhausted Other Entitlement, for CalendarYear 1997 78 F. Glossary 83 G. Statement ofActuarial Opinion 97 (V) TABLES ECONOMIC AND DEMOGRAPfflC ASSUMPTIONS — I.Dl. UltimateAssumptions 8 10-YEARACTUARIAL ESTIMATES — LEI. Estimated Operations ofthe HI Trust Fund Under IntermediateAssumptions, CalendarYears 1996-2006 .... 11 NATURE OF THE TRUSTFUND — II.Bl. Tax Rates andMaximum Tax Bases 18 OPERATIONS OF THE TRUSTFUND, FISCALYEAR 1996 — II.Cl. Statement ofOperations ofthe HI Trust Fund DuringFiscalYear 1996 21 — II.C2. Comparison ofActual and Estimated Operations of the HI Trust Fund, FiscalYear 1996 24 II.C3.—Assets ofthe HI Trust Fund, by Type, at the End of FiscalYears 1995 and 1996 25 EXPECTED SHORT-RANGE OPERATIONS AND STATUS OF THE TRUSTFUND II.Dl.—Operations ofthe HI Trust FundDuringFiscal Years 1970-2006 30 — II.D2. Operations ofthe HI Trust Fund During Calendar Years 1970-2006 32 — II.D3. Estimated Operations ofthe HI Trust Fund During CalendarYears 1996-2006, UnderAlternative Sets of Assimiptions 35 — II.D4. Ratio ofAssets atthe BeginningoftheYearto Disbursements DuringtheYearforthe HI Trust Fund ... 37 ACTUARIAL STATUS OF THE TRUSTFUND — lI.El. Historical CostRates ofthe HI Program 41 (VI) — II.E2. Projected Cost and Income Rates ofthe HI Program 42 — II.E3. ^Actuarial Balances ofthe HI Program, Under Three Sets ofAssumptions 44 — II.E4. Change inthe 75-YearActuarial Balance Since the 1996 Report 47 ACTUARIAL METHODOLOGYAND PRINCIPAL ASSUMPTIONS FOR THE HOSPITAL INSURANCE COST ESTIMATES — II.Fl. Components ofHistorical and Projected Increases in HI Inpatient Hospital Payments 52 — 11.F2. Relationship Between Increases in HI Program Expenditures and Increases in Taxable Payroll 56 — ILF3. Summary ofAlternative Projections forthe HI Program 59 LONG-RANGE SENSITIVITYANALYSIS — II.Gl. Estimated HI Income Rates, Cost Rates, and Actuarial Balances, Based on Intermediate Estimates With Various Real-WageAssumptions 62 — II.G2. Estimated HI Income Rates, Cost Rates, and Actuarial Balances, Based on Intermediate Estimates With Various CPI-IncreaseAssumptions 63 — 11.G3. Estimated HI Income Rates, Cost Rates, and Actuarial Balances, Based on Intermediate Estimates With Various Real-InterestAssumptions 64 — II.G4. Estimated HI Income Rates, Cost Rates, and Actuarial Balances, Based on Intermediate Estimates With Various Health Care Cost Growth RateAssumptions .... 66 ACTUARIAL BALANCE UNDER THE MODIFIED AVERAGE- COSTMETHOD — III.Al. ^Actuarial Balances ofthe HI Program, Under Three Sets ofAssumptions: ModifiedAverage-Cost Method versus Present-Value Method 69 LONG-RANGE ESTIMATES OF MEDICARE INCURRED DISBURSEMENTSASAPERCENTAGE OF GROSS DOMESTIC PRODUCT — III.Bl. HI and SMI Incurred Disbursements as a Percent ofGross Domestic Product 70 (VII) MEDICARE COST SHARINGAND PREMIUMAMOUNTS — III.Cl. Medicare Cost Sharing and PremiumAmounts ........ 73 FIGURES I.Cl.—HI Income in CalendarYear 1996 5 I.C2.—HI Expenditures in CalendarYear 1996 6 — I.El. HI Expenditiu-es and Income 9 I.E2.—HI Trust FundAssets at End ofYear 10 — I.Fl. Long-Range HI Income and Cost as a Percentage ofTaxable Payroll, IntermediateAssumptions 12 I.F2.—Workers PerHI Beneficiary 13 — II.Dl. HI Trust Fund Balance at BeginningofYear as a Percentage ofAnnual Expenditures 38 ILD2.—HI Trust Fund Balance at End-of-Year ' 38 — lI.El. EstimatedHI Cost and Income Rates as Percent ofTaxable Payroll 46 (VIII)

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