Some politicians are promising to “protect” Medicare by leaving it alone  while others pledge to expand it. Such vows ignore the fact that Medicare faces serious financial issues that must be addressed. In their latest report, the Medicare trustees project that the Hospital Insurance trust fund, which finances Medicare Part A, will be exhausted by 2026. That means recipients will face benefit cuts just eight years from now if something isn’t done. 


An aging population and rising health care costs will present significant challenges

  • The population over 65 will grow by over 60 percent in the next 25 years. Nine percent of the population was 65 and over in 1965; 15 percent in 2015; and the number will be 21 percent in 2040.
  • Health care spending will grow faster than the economy. Average costs will grow by about 5 percent per beneficiary from now through 2040.

Medicare will consume a larger share of the federal budget and push debt higher

  • Medicare is one of the largest federal programs and is growing rapidly.
  • Medicare accounts for 16 percent of non-interest federal spending today and that will grow to 24 percent by 2040.
  • By  2031, every dollar of revenue collected will go towards mandatory  spending, such as Medicare, Medicaid and Social Security, and interest on the debt.
  • The growth of Medicare will crowd out other spending, including public investments that can help grow the economy.
  • Health care programs, particularly Medicare, will be the largest driver of future government spending.

Medicare’s finances will deteriorate, imperiling benefits

  • The Medicare Part A (Hospital Insurance) trust fund will be exhausted by 2026, which means recipients will face benefit cuts just 8 years from now.
  • The disparity between benefits paid out and what is paid in is wide and growing.
  • The Urban Institute estimated that an average wage earner turning 65 in 2015 would have paid $70,000 into Medicare in their lifetime and received $215,00 in lifetime benefits.
  • Medicare beneficiaries typically receive about $3 to $4 in benefits for every dollar they pay in taxes.
  • By 2030, Medicare taxes and premiums will cover less than 50 percent of Medicare spending.
  • The Trustees conclude, "The projections in this year’s report continue to demonstrate the need for timely and effective action to address Medicare’s remaining financial challenges — including the projected  depletion of the HI trust fund, this fund’s long-range financial  imbalance, and the rapid growth in Medicare expenditures."

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