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Life Health > Health Insurance > Medicare Planning

Medicare's Top Actuary: COVID-19 Sped Up the Deaths of High-Cost Enrollees

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What You Need to Know

  • Medicare actuaries wanted to know what the COVID-19 did to current Medicare enrollee sickness level.
  • They're taking hints from the catastrophic 1918 influenza pandemic, which improved the U.S. population sickness level.
  • One actuary says the effect of death acceleration seems to have been large.

Analysts at the Centers for Medicare and Medicaid Services believe that the COVID-19 pandemic accelerated the deaths of many older Americans who were already sick and were already on track to die within the next five years.

The death acceleration effect was big enough to account for a big drop in fee-for-service Medicare enrollees’ use of hospital services in 2022, according to Paul Spitalnic, the CMS chief actuary.

Traditional Medicare program enrollees’ inpatient spending in 2022 was 8.7% below the level projected before the pandemic began, and CMS believes that pandemic-related acceleration of the deaths of older people with underlying health problems accounted for about 3.4% of the spending gap, Spitalnic reported.

Spitalnic talked about the CMS hospital spending analysis on May 16, during a webinar the American Academy of Actuaries Health Practice Council held to brief actuaries on Medicare’s finances.

What It Means

COVID-19 has had at least three different effects that could make predicting how healthy clients will be — and how long they will live — more difficult: It has already killed some clients early; it may have directly or indirectly caused chronic health problems that will kill some clients early;  and its effects on overall population health may mean that some clients will live longer than expected.


Actuaries are people who have taken classes and passed tests to show they know the math needed to analyze many different types of risk.

In the life, health and annuity sector, they helped with designing, pricing, administering and regulating health insurance, life insurance, disability insurance, pension plans, individual annuity contracts and related products and services.

The American Academy of Actuaries is a group that helps actuaries weigh in on matters involving public policy. It has about 19,500 members.


Medicare is a federal program that provides insurance for people ages 65 and older, many people who are receiving Social Security disability insurance benefits and people who have such severe kidney disease that they’re getting kidney dialysis, kidney transplants or similar services.

The Medicare Part A hospitalization program relies mainly on payroll tax revenue, and excess payroll tax revenue stored in a trust fund, to pay for inpatient hospital services. In 2022, it spent $342 billion, according to Spitalnic.

Medicare Part B uses enrollee premium payments and government contributions to cover physician services and outpatient hospital services. It spent $437 billion in 2022.

The Part A trust fund is on track to go dry in 2031, and members of Congress and other policymakers are developing and debating proposals now for keeping the trust fund solvent.

The 1918 Influenza Pandemic

The COVID-19 pandemic has been similar in some ways to the terrible influenza pandemic of 1918, which killed about 550,000, or 0.6%, of the 100 million people who then lived in the United States.

COVID-19 has killed about 1.1 million, or 0.3%, of the 330 million people who live in the United States now.

Many life insurance actuaries believe that the 1918 pandemic ended up improving overall U.S. death rates in the 1920s.

Although the 1918 pandemic left some people with chronic health problems, it also caused some people with underlying health problems to die just a few years earlier than they would have if the flu pandemic had not occurred. That lowered the overall “morbidity” level, or sickness level, of the U.S. population, according to the actuaries who believe that the net effect of the 1918 pandemic on population morbidity was positive.

The COVID-19 Death Acceleration Effect

The COVID-19 pandemic clearly held down Medicare spending and improved Medicare Part A trust fund solvency, Spitalnic said.

Officials are expecting Medicare spending to increase to the originally projected levels over time.

Part of the decrease that has occurred so far was due to efforts to keep patients out of hospitals in 2020 and 2021, in order to save room for COVID-19 patients and reduce the odds that other patients would get COVID-19.

CMS is still trying to understand the rest of the spending drop.

A simple comparison of Medicare enrollees who died from COVID-19 in 2020 with survivors shows that they had similar 2019 health risk scores, Spitalnic said.

CMS analysts tried to dig below the surface by comparing four years of records for enrollees who died from COVID-19 with the records for seemingly similar enrollees who survived.

The more in-depth analysis showed that the people who died from COVID-19 were sicker.

By removing them from the Medicare enrollee population, the pandemic had the effect of improving overall Medicare fee-for-service patient morbidity level by 2.5% in 2021, 4% in 2022 and 4.4% this year.

By causing acute and chronic health problems, the COVID-19 pandemic also increased the morbidity level of the Medicare enrollee population by 1.9%.

The positive and negative effects of COVID-19 and other factors contributed to the overall 8.7% decrease in 2022 hospital spending, Spitalnic said.

Medicare Solvency “Pay-Fors”

Another speaker, Bowen Garrett, a senior fellow at the Urban Institute, talked about the institute’s latest predictions about how much cash some widely discussed strategies for paying to shore up Medicare would save.

Here are predictions about how some of the proposals might affect federal revenue over the period from 2022 through 2031:

  • Increasing the individual federal income tax rate for everyone by 1 percentage point: $977 billion
  • Increasing the income tax rate by 1 percentage point only for people in relatively high tax brackets: $444 billion
  • Repealing the tax break for employer-sponsored health coverage: $414 billion
  • Imposing the net investment income tax on business owners who earn more than $200,000, if they’re single, or more than $250,000, if they’re married and file joint returns: $260 billion
  • Increasing corporate income tax rates by 1 percentage point: $87 billion

(Image: CMS)


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