The Countdown
Our major federal trust funds are approaching insolvency.
What is the Medicare Hospital Insurance Trust Fund?
Medicare, a federal health insurance program, provides coverage primarily to people aged 65 and older. Its Hospital Insurance trust fund finances just Medicare Part A, which covers inpatient care in hospitals. Its revenue comes primarily from a 2.9% payroll tax, paid equally by workers and employers.
Medicare Part B, which covers outpatient care, and Medicare Part D, which covers prescription drugs, are financed through a different federal trust fund funded mainly by beneficiary premiums and general revenue from the federal government. Though their costs are high and rising, they don’t face the same type of solvency challenges.
Why is it in trouble?
Health care costs are rising, and the population is aging. This means more people are becoming eligible for Medicare, their benefits are becoming more costly, and there are less people in the workforce paying the taxes that support those benefits.
What can we do to ensure Medicare trust fund solvency?
We need to reduce health care costs, change benefit design, increase payroll tax revenue and/or identify new sources of revenue for the trust fund.
Get Into the Weeds
Ten Options to Secure the Medicare Trust Fund
As health care costs rise and the population continues to age, the gap between Medicare costs and revenue collections is continuing to grow. Without action, Medicare payments from the trust fund would be significantly reduced or delayed, leading to a potential loss of access to care for enrollees.
We catalogue ten potential options to improve the solvency of the Medicare HI trust fund. These options are meant to serve as illustrative examples and, in most cases, represent relatively ambitious versions of policies that could be scaled up or down in a variety of ways.
A Deeper Dive
Event Recap: Checking in on the Social Security and Medicare Trust Funds
On April 4, the Committee for a Responsible Federal Budget hosted "Checking in on the Social Security and Medicare Trust Funds." The event featured...
Paragon Health Institute Releases Proposals to Lower Health Care Costs
The Paragon Health Institute recently released a report highlighting 12 options to decrease federal health care spending. The report, titled “Turning...
Analysis of the 2023 Medicare Trustees' Report
The Trustees for the Social Security and Medicare programs have released their annual reports for 2023, updating the financial state of the programs’...
What Can I do?
Reach Out to Congress
We need Congress to fix these tough issues before our seniors, our economy, and future generations are in jeopardy. Find your representative and share your concerns.