Here’s how the Centers for Medicare and Medicaid Services summarize the findings, which carry the formal title “2012 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds” :

[Medicare Hospital Insurance Trust Fund] expenditures have exceeded income annually since 2008 and are projected to continue doing so under current law in all future years.  Trust Fund interest earnings and asset redemptions are required to cover the difference.  HI assets are projected to cover annual deficits through 2023, with asset depletion in 2024.  After asset depletion, if Congress were to take no further action, projected HI Trust Fund revenue would be adequate to cover 87 percent of estimated expenditures in 2024 and 67 percent of projected costs in 2050.  In practice, Congress has never allowed a Medicare trust fund to exhaust its assets.

The financial projections for Medicare reflect substantial cost savings resulting from the Affordable Care Act, but also show that further action is needed to address the program’s continuing cost growth.

The Trustees, by saying that Medicare will go bankrupt in 2024, instead of 2016, are simultaneously saying that the program will increase the deficit by several hundred billion dollars. This is precisely the insight that Charles Blahous, one of the Medicare Trustees, explained in his recent report on the program.

Think of it this way: if supporters of the Affordable Care Act came clean, they would say one of two things: (1) Medicare is going bankrupt in 2016, but the CBO scores the ACA as deficit neutral; or (2) Medicare is going bankrupt in 2024, and Blahous’ score of the ACA as increasing the deficit by $300-500 billion is accurate.

Which path will they choose? As Chris Jacobs notes, President Obama has admitted that, “You can’t say that you are saving on Medicare and then spending the money twice.” That is, Chuck Blahous is right.

Medicare actuary Richard Foster splashes cold water on the Trustees’ report

If you want to get a sense of how Medicare’s finances look when viewed with real-world accounting assuptions, head to Richard Foster’s “Statement of Actuarial Opinion,” which begins on page 277. “In past reports, and again this year, the Board of Trustees has emphasized the strong likelihood that actual Part B expenditures will exceed the projections under current law due to further legislative action to avoid substantial reductions in the Medicare physician fee schedule,” Foster writes.

What he means is that Medicare’s reimbursements to doctors are scheduled to drop by 31 percent on January 1, 2013. Only then is Medicare solvent until 2016/2024. If Congress passes another of its numerous “doc fixes,” Medicare’s insolvency will be even closer at hand. The optimistic insolvency estimate from the Trustees will require “unprecedented changes in health care delivery systems and payment mechanisms,” without which Medicare fees “are very likely to fall increasingly short of the costs of providing those services.”

“For these reasons, the financial projections shown in this report for Medicare do not represent a reasonable expectation for actual program operations in either the short range…or the long range,” writes Foster.

I wrote about this problem last March: how calculations of Medicare’s solvency assume drastic reductions to Medicare’s fee schedules, reductions that would cripple the ability of retirees to gain access to medical care. If we can’t even be honest about Medicare’s finances, how can we hope to ever reform the program?

Follow Avik on Twitter at @aviksaroy.

UPDATE 1: Chris Jacobs makes the following relevant points at his Freedom on Call blog:

1. Insolvency One Year Closer: Contrary to predictions made in this space this morning, the insolvency date for the Medicare Hospital Insurance Trust Fundremains at 2024 – despite the 2% sequester cuts scheduled to take effect beginning in January.  In other words, if not for the sequester cuts insisted on by Congress, Medicare’s financial stability would have deteriorated even further.  As it is, we’re still one year closer to Medicare running out of IOUs to cash in to pay its bills (see #3 below).
2. Obama Economy Making It Worse: As the Associated Press noted, “Social Security’s finances worsened” – and Medicare’s finances did not improve, sequester notwithstanding – “in part because high energy prices suppressed wages, a trend the trustees see as continuing.  The trustees said they expect workers to work fewer hours than previously projected, even after the economy recovers.”  President Obama’s poor economic record is not only harming workers today, it will harm future generations – seniors in current entitlement programs that are less secure, and children and grandchildren forced to pay the bills for skyrocketing spending – for decades to come.
3. Deficits as Far as the Eye Can See: The report once again confirms that the Medicare program is already contributing to the federal deficit, will continue to do so throughout the coming decade, and forever thereafter.  Since 2008, the program has run cash flow deficits; this year’s deficit is expected to total $28.9 billion.  The only thing keeping the program afloat financially is the sale of Treasury bonds in the Medicare Trust Fund – and the redemption of those paper IOUs increases the federal deficit.
4. Funding Warning: For the seventh straight year, the trustees issued a funding warning showing that the Medicare program is taking a disproportionate share of its funding from general revenues, thus crowding out programs like defense and education.  While in theory this development should prompt the President to follow his statutory requirement to submit legislation remedying this funding shortfall, the White House has previously refused to do so – relying instead on asigning statement by President Bush to ignore the need for Medicare reform (and also breaking the President’s campaign promises in the process).
5. Unrealistic Assumptions: For the third straight year since the passage of Obamacare, the report features a statement of actuarial opinion by the non-partisan Medicare actuary (pages 277-279 of the report), who says “the financial projections shown in this report…do not represent a reasonable expectation for actual program operations.”  The actuary will again issue an alternative scenariofor Medicare’s unfunded obligations that he views as more realistic, because the major source of Medicare payment reductions in Obamacare may not be sustained over a long period of time.
6. Double Counting: The actuary also previously confirmed that the Medicare reductions in Obamacare “cannot be simultaneously used to finance other federal outlays and to extend the [Medicare] trust fund” solvency date – rendering dubious any potential claims that Obamacare will extend Medicare’s solvency.  As Speaker Pelosi admitted last year, Democrats “took a half a trillion dollars out of Medicare in [Obamacare], the health care bill” – and you can’t improve Medicare’s solvency by taking money out of the program.
7. Massive Tax Increases: Today’s report again confirms that Medicare’s finances are also being bolstered by the extension of the health care law’s “high-income” tax – which is NOT indexed for inflation – to more and more individuals over time.  Page 30 of the report notes that “by the end of the long-range projection period, an estimated 80 percent of workers would pay the higher tax rate.”  As JEC recently reported, these tax increases are part of the $4 trillion in “revenue enhancements” over the next 25 years taking place thanks to Obamacare.  When Democrats talk about raising taxes to reduce the deficit, keep in mind that they have already raised taxes in a way that will harm middle-class families over time – and that those tax increases were used not to reduce the deficit but to pay for new and unsustainable entitlements.
8. Seniors Losing Coverage, Part I: Table IV.C1 of the report notes that millions of seniors will lose their current Medicare Advantage plans – enrollment is projected to fall from 13.5 million this year to 9.7 million by 2017.  However, thanks to the waiver/demonstration program announced by the Administration, and criticized by the Government Accountability Office in a report this morning,enrollment in Medicare Advantage will not begin falling until after the President has completed his re-election campaign.
9. Seniors Losing Coverage, Part II: Table IV.B10 of the report re-stated prior projections that enrollment in employer-sponsored retiree drug plans will fall from 6.8 million in 2010 to a mere 800,000 by 2016 – a drop of nearly 90%.  This rapid decrease in enrollment occurs thanks to provisions in Obamacare that raise taxes on employers who continue to offer retiree drug coverage.