I have a few simple questions.
If Medicare is the model we are to follow for all Americans and Medicare is the model for administrative efficiency and Medicare pays health care providers far less than private insurers, why is all the following true?
Why are costs still increasing at rates beyond normal inflation? Why has funding been allowed to remain inadequate and at the same time spending to contribute to the deficit without limit?
If Medicare can’t be managed for a minority group of Americans, how will it be managed for all Americans? What will be different?
Financial Status 2018 Trustee Report
Total Medicare expenditures were $710 billion in 2017. The Board projects that expenditures will increase in future years at a faster pace than either aggregate workers’ earnings or the economy overall and that, as a percentage of GDP, they will increase from 3.7 percent in 2017 to 6.2 percent by 2092 (based on the Trustees’ intermediate set of assumptions).
If the relatively low price increases for physicians and other health services under Medicare are not sustained and do not take full effect in the long range as in the illustrative alternative projection, then Medicare spending would instead represent roughly 8.9 percent of GDP in 2092. Growth under any of these scenarios, if realized, would substantially increase the strain on the nation’s workers, the economy, Medicare beneficiaries, and the Federal budget.
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.
For HI, the primary source of financing is the payroll tax on covered earnings. Employers and employees each pay 1.45 percent of a worker’s wages, while self-employed workers pay 2.9 percent of their net earnings. Starting in 2013, high-income workers pay an additional 0.9-percent tax on their earnings above an unindexed threshold ($200,000 for single taxpayers and $250,000 for married couples).
Other HI revenue sources include a portion of the Federal income taxes that Social Security recipients with incomes above certain unindexed thresholds pay on their benefits, as well as interest paid from the general fund on the U.S. Treasury securities held in the HI trust fund.
For SMI, transfers from the general fund of the Treasury represent the largest source of income and covered about 70 percent of program costs in 2017. Also, beneficiaries pay monthly premiums for Parts B and D that finance a portion of the total cost. As with HI, the U.S. Treasury securities held in the SMI trust fund earn interest paid from the general fund.