Medicare

Medicare is headed for growing financial problems. Political rhetoric has hampered the changes needed for Medicare (and Social Security) to remain solvent and affordable.

The Trustees project that HI tax income and other dedicated revenues will fall short of HI expenditures in all future years. The HI trust fund does not meet either the Trustees’ test of short-range financial adequacy or their test of long-range close actuarial balance.

The Part B and Part D accounts in the SMI trust fund are expected to be adequately financed because premium income and general revenue income are reset each year to cover expected costs. Such financing, however, would have to increase faster than the economy to cover expected expenditure growth.

The financial projections in this report indicate a need for substantial steps to address Medicare’s remaining financial challenges.

Consideration of further reforms should occur in the near future. The sooner solutions are enacted, the more flexible and gradual they can be. Moreover, the early introduction of reforms increases the time available for affected individuals and organizations—including health care providers, beneficiaries, and taxpayers—to adjust their expectations and behavior. The Trustees recommend that Congress and the executive branch work closely together with a sense of urgency to address the depletion of the HI trust fund and the projected growth in HI (Part A) and SMI (Parts B and D) expenditures.

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2 replies »

  1. Of the two looking fiscal disasters, Social Security and Medicare, Social Security is by far the easiest to fix, at least conceptually. Yet Congress and the President yawn.

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    • Yes indeed. It could have been fixed years ago and quite painlessly. Instead congress plays games pretending everything is okay. Even now the Social Security 2100 bill should be actively considered, but is ignored.

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