Last year, Medicare was predicted to run out of money by 2017. Now, Medicare is predicted to have enough money to last another 12 years. What changed? The answer is health reform.

At least that's the answer given in the Medicare Trustee's report issued August 5. The trustees oversee both Social Security and Medicare. The report states that health reform will save $575 billion over the next decade. That's because health reform raises taxes on high-income earners and eventually raises taxes on high-cost health benefits. The report also notes that savings are expected to come by reducing the number of uninsured hospital patients.

This report gave Democrats ammunition to fire back at Republicans who have been itching to repeal the new law. Republicans will have little leverage to roll back a law that is predicted to put the country on better financial footing.

A month ago, before the new estimates came out, the International Monetary Fund looked at the country's health care obligations and suggested, as I wrote here, that to meet those obligations the government would have to increase  payroll taxes or push back the eligibility age. If the report is to be trusted, the need for higher payroll taxes will not be immediate.

One problem with the trustees report, however, is that the savings are contingent on tough political decisions down the road. In other words, the report's cost savings takes the law at its word but doesn't account for the fact that the law is not written in stone. The law requires Congress to reduce payments to physicians by 30 percent to reach its targeted cost savings.

But as this alternative scenario prepared by Medicare in response to its own report points out, cutting that much out of Medicare would be a huge blow to physicians. Not only would they push back against politicians, as they have in the past, huge cuts are likely to undermine the value of Medicare.

Already, doctors have stopped taking Medicare patients because there's little profit in doing so. Just as Congress as often does in these matters, they are likely to hold off on reducing payments to doctors so that doctors don't reject Medicare patients en masse.

Amazingly, even if legislators do not reduce payments to doctors the impact on the trust fund will be minimal. Rather than running out of money in 2029, Medicare will run out of money in 2028-just one year earlier. That's still better than the 2017, the expiration date that was predicted for Medicare prior to the enactment of health reform.

Now, the question is: how will we extend Medicare to 2030?