July 12—Medicare’s recent projection that the Hospital Insurance Trust Fund will remain solvent until 2026—two years longer than previously estimated—is a credit positive for hospitals, according to a recent report from Moody’s Investors Service. 

The report indicates that the improved outlook for the Trust Fund is advantageous for hospitals because Medicare is the single largest payer to the majority of not-for-profit hospitals, representing 44 percent of gross revenues, on average. According to Moody’s, Medicare’s new projection reduces the incentive for Congress to make additional cuts to the Medicare program. 

Moody’s suggests that the underlying reasons for the Trust Fund’s improved outlook are lower Medicare spending growth in 2012 and lower spending-per-beneficiary in recent years.

Publication Date: Friday, July 12, 2013