Medicare Is Not “Bankrupt” — Center on Budget and Policy Priorities

Medicare Is Not “Bankrupt” — Center on Budget and Policy Priorities

click link

from article
-----

The 2024 date does not applyto Medicare coverage for physician and outpatient costs or to the Medicare prescription drug benefit; these parts of Medicare do not face insolvency and cannot run short of funds.  These parts of Medicare are financed through the program’s Supplementary Medical Insurance (SMI) trust fund, which consists of two separate accounts — one for Medicare Part B, which pays for physician and other outpatient health services, and one for Part D, which pays for outpatient prescription drugs.   Premiums for Part B and Part D are set each year at levels that cover about 25 percent of costs; general revenues pay the remaining 75 percent of costs.[2]  The trustees’ report does not project that these parts of Medicare will become insolvent at any point — because they can’t.  The SMI trust fund always has sufficient financing to cover Part B and Part D costs, because the beneficiary premiums and general revenue contributions are specifically set at levels to assure this is the case.  SMI cannot go “bankrupt.”
Nonetheless, Medicare faces serious financing challenges in order to make the Hospital Insurance trust fund solvent over the long term and to reduce unsustainable federal budget deficits that are driven in part by Medicare’s rising costs.  Major reforms in health care payment and delivery will be essential throughout the U.S. health care system, and Medicare will need to play an important role in leading the way to those reforms.  A first step, however, should be to “do not harm” — that is, not make Medicare’s financing challenges even greater.  Repealing the Affordable Care Act would do exactly that.