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
The Medicare Hospital Insurance (HI), or Part A, trust fund is expected to be only five years from insolvency and faces a large funding gap over the next decade. Trust fund solutions are needed to bring the program’s dedicated revenue and spending in line.
A Deeper Dive
Medicare Advantage Costs Continue to Rise
The Centers for Medicare and Medicaid Services (CMS) recently announced that Medicare Advantage (MA) plans will receive an 8.5 percent payment...
Can Post-Acute Care Reforms Save the Medicare Trust Fund?
The Medicare Part A Hospital Insurance (HI) trust fund will be insolvent within five years according to the Congressional Budget Office (CBO) and the...
MedPAC Releases 2022 Medicare Report
The Medicare Payment Advisory Commission (MedPAC) released its biannual report yesterday. The report includes analysis and recommendations to improve...
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.