Medicare’s Finances – Challenges and Solutions

 

As discussed in a previous CMA Alert, in April 2020, the Medicare and Social Security Trustees released their 2020 annual report, which offers projections concerning the fiscal health of the Medicare and Social Security programs.  At that time, the Medicare Trustees estimated that the Part A Trust Fund will be depleted by 2026, unchanged from last year’s projection.  The Trustees noted in their report, however, that such projections did not account for the COVID-19 pandemic.

On September 3, 2020, the Kaiser Family Foundation (KFF) posted a policy update entitled “Medicare’s Finances Have Gotten Much Worse in Recent Years, Foreshadowing Tough Choices for November’s Winners” wherein they noted that according to the latest estimates of the Congressional Budget Office (CBO), the Part A Trust Fund “will have insufficient funds to cover all benefit costs beginning in 2024 – just four years from now, and sooner than last year’s projected depletion date of 2026.”

According to KFF, “[t]he outlook for the Medicare HI trust fund has worsened in recent years due to a combination of factors, including the economic impact of COVID-19 on payroll tax revenue and several laws enacted by Congress and signed into law by President Trump that either increased Medicare spending or reduced revenues, including legislation that cut taxes and repealed the Independent Payment Advisory Board, the ACA individual mandate penalty, and the ‘Cadillac tax’.”

As the Center noted in our Alert about the Trustees report, the Trustees’ projection – along with CBO’s more recent projection - should not be used as an excuse to cut Medicare benefits for older and disabled people.  As demonstrated by the positive impact the Affordable Care Act had on increasing the life-span of the Trust Fund, the problem is fixable without reducing benefits. Instead, the Administration and Congress should negotiate drug prices for the whole Medicare program, end efforts to repeal and sabotage the Affordable Care Act, and stop wasteful Medicare Advantage overpayments. There’s a way, if there’s the will.