The Affordable Care Act, Medicare Costs, and Retirement Security

by Alicia H. Munnell; Anqi Chen

Nov 1, 2015
Rising Medicare costs have been a major contributor to projected long-run budget deficits, and rising outof-pocket costs have become an increasing challenge to individuals' retirement security. The 2010 Patient Protection and Affordable Care Act (ACA) made substantial changes to Medicare, designed both to improve the program's finances and to reduce the outof-pocket costs faced by retirees. However, the Office of the Actuary (OACT) at the Centers for Medicare & Medicaid Services (CMS) warns that the assumed impact of the ACA may be overly optimistic and that realized savings may be far more muted. As a result, since 2010, OACT each year has released a set of alternative projections to illustrate Medicare expenditures if current-law payment reductions are not sustained. This brief compares the baseline projections in the annual Medicare Trustees Report with OACT's alternative projections.
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