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The Medicare financing conundrum: revenues, spending, and short- and long-term fiscal challenges
The Medicare financing conundrum: revenues, spending, and short- and long-term fiscal challenges
- Collection:
- Health Policy and Services Research
- Author(s):
- Steuerle, C. Eugene, 1946- author
Garrett, Bowen, author - Contributor(s):
- Health Policy Center (Urban Institute), issuing body.
Urban Institute, issuing body. - Publication:
- Washington, DC : Urban Institute, September 2022
- Language(s):
- English
- Format:
- Text
- Subject(s):
- Financing, Government -- trends
Health Policy
Medicare -- economics
Medicare -- legislation & jurisprudence
Medicare -- statistics & numerical data
United States - Genre(s):
- Technical Report
- Abstract:
- The Medicare program, which provides health insurance coverage to 64 million elderly and disabled Americans, faces serious short- and long-term financial pressures in each of its two components. The first component, Hospital Insurance (HI) or Part A, helps pay for hospital and most institutional services as well as skilled nursing facility, hospice, and some home health care. It is financed through the HI trust fund, into which receipts from a payroll tax imposed on workers’ earnings are deposited. When the inflows of payroll taxes and other receipts, along with accumulated surpluses, are insufficient to cover HI costs, the law requires that payments to providers somehow be reduced to the level of incoming receipts. The second component, Supplementary Medical Insurance (SMI), has two elements: Part B, which helps pay for physicians’ outpatient services, laboratory tests, physician-administered drugs, and durable medical equipment, and Part D, which helps pay for self-administered prescription drugs. Both Parts B and D are financed by beneficiary premiums and federal general revenues deposited into the SMI trust fund. Unlike in the HI trust fund, when the balances in the SMI trust fund run low, they are automatically replenished with general revenues, and beneficiary premiums for Parts B and D are increased. The HI trust fund is expected to be depleted sometime around 2028 (Medicare Trustees 2022). Were this to occur, Medicare would not be able to make full and timely payments to HI health care providers, creating adverse consequences for patient care. Meanwhile, SMI spending will require ever-larger infusions of funds from general revenues, leading to higher deficit spending and ever-increasing beneficiary premiums, whose growth rate typically will exceed that of beneficiaries’ incomes. Given the immediate and visible adverse effects that HI trust fund insolvency would cause, some type of congressional action is inevitable. Tackling HI insolvency and the growing pressure on the federal budget requires slowing the rate of growth in health or other benefits paid, increased financing, or, most likely, both
- Copyright:
- Reproduced with permission of the copyright holder. Further use of the material is subject to CC BY-NC-DC license. (More information)
- Extent:
- 1 online resource (1 PDF file (16 pages))
- Illustrations:
- Illustrations
- NLM Unique ID:
- 9918503478106676 (See catalog record)
- Permanent Link:
- http://resource.nlm.nih.gov/9918503478106676