Christopher Holt September 3, 2021
This week the Social
Security and Medicare Trustees released their annual reports on the relative
health of the nation’s entitlement programs (check out AAF’s
analysis here). There has been a fair amount of buzz in recent weeks
regarding the reports’ tardiness—and whether the administration was delaying
their release to avoid broadcasting Medicare’s pending insolvency while
congressional Democrats are seeking to massively increase Medicare spending. Of
course, now that the numbers are out there, the fight to spin them begins.
Putting aside that noise, however, here is the utterly unsurprising
takeaway: Medicare is rapidly running out of money to cover program costs.
According to the Medicare
Trustees, the Medicare Trust Fund, which covers hospital services, will be
exhausted in 2026, and incoming revenues have long been insufficient to cover
expenditures. Some are spinning this as good news, considering worries that the
COVID-19 pandemic could have accelerated the timeline. Focusing on that silver
lining appears to be an attempt to obscure the looming thunderclouds, however.
In 2018, 2019, 2020, and now 2021, the Trustees have told us the same thing:
Medicare will run out of money in 2026. The situation is real, and the
figures are clear—it’s not a recurring typo, or even right-wing fear mongering
(the current Trustees are all Biden appointees). The only thing that’s really
changed is that the insolvency date is now a year closer. Unfortunately,
that’s how calendars work.
AAF’s Jackson Hammond and Gordon Gray provide
all the details here, but let’s look at some highlights (or more
appropriately, lowlights) from the report. Medicare’s revenue in 2020 was
$430.3 billion, but the program spent $925.8 billion for a total shortfall of
$495.5 billion—for which my as-yet nonexistent grandchildren will surely one
day receive a bill. Medicare’s 2020 cash shortfall represented 16 percent of
the federal deficit last year. In fact, year-over-year Medicare shortfalls now
account for nearly a third of the federal debt. While progressives want to
lower the Medicare eligibility age and add coverage for vision, hearing, and
dental, it would take a 32.6 percent increase in the Medicare payroll tax just
to cover last year’s Part A shortfall for existing benefits, and Medicare
premiums would have needed to be $4,797 higher per beneficiary in 2020 to cover
the Part B cash deficit.
The looming Medicare crisis
has many authors, and the program’s dire outlook has been clear for years, but
previous administrations and Congresses have simply looked the other way. As
Hammond writes, “The Obama Administration oversaw a $2.4 trillion cash
shortfall over 8 years (2009-2016), while the Trump Administration oversaw its
own $1.6 trillion Medicare cash shortfall.” President Biden is on track to
continue the trend with the Trustees projecting a nearly half-billion cash
shortfall in his first year. President Biden may not be responsible for the
current predicament—or rather, considering his decades of service in the Senate
and as vice president, not solely responsible—but if he secures a second term,
he will be the one left holding the bag. One would think this would make him a
little more concerned with addressing the problems, rather than exacerbating
them.
Sticking our collective heads
in the sand and wishing Medicare’s solvency issues away won’t fix anything, and
progressive efforts to expand the program will only accelerate the program’s
collapse. This week, the Trustees reminded us that Medicare’s day of reckoning
is coming—and it’s one year closer.
CHART
REVIEW: MEDICARE YEARLY TOTAL INCOME AND EXPENDITURES OVER TIME
Jackson Hammond, Health Care Policy Analyst
The 2021 Medicare Trustees report, finally
released on August 31, provides a clear picture of the Medicare program’s
fiscal state. As my colleague Christopher Holt explains above, Medicare is in
dire fiscal straits, with an ever-growing financial shortfall. This shortfall
is simply explained: Medicare expenditures outstrip program revenue almost
every year since 2009. The chart below illustrates the yearly income and
expenditures every 10 years for Medicare since 1980. Unsurprisingly, there has
been an explosion in both. Some efforts have been made to address Medicare’s
revenue problems, including legislation passed in 1993 removing the maximum
amount of income that could be taxed for the Hospital Insurance trust fund,
increased funding transfers by the Treasury from general revenues to the
Supplemental Medical Insurance trust fund, and increased premiums for
beneficiaries. Additionally, taxable income has grown over time. Expenditures,
however, have increased even more rapidly as health care costs have gone up
significantly since 1980, along with the number of Medicare beneficiaries.
Sources: U.S. Department
of Health and Human Services, Mayo Clinic
TRACKING
COVID-19 CASES AND VACCINATIONS
Margaret Barnhorst, Health Care Policy Fellow
To track the progress in vaccinations, the
Weekly Checkup will compile the most relevant statistics for the week, with the
seven-day period ending on the Wednesday of each week.
|
Week
Ending: |
|||
|
1-Sep-21 |
153,245 |
278,519 |
1,046 |
|
25-Aug-21 |
146,086 |
346,518 |
1,009 |
|
18-Aug-21 |
141,778 |
300,851 |
923 |
|
11-Aug-21 |
123,213 |
240,550 |
740 |
|
4-Aug-21 |
100,421 |
212,830 |
516 |
|
28-Jul-21 |
70,789 |
205,770 |
364 |
|
21-Jul-21 |
45,053 |
224,571 |
274 |
|
14-Jul-21 |
29,415 |
246,277 |
232 |
|
7-Jul-21 |
16,602 |
242,619 |
193 |
|
30-Jun-21 |
13,925 |
322,570 |
233 |
|
23-Jun-21 |
11,971 |
408,578 |
251 |
|
16-Jun-21 |
12,361 |
629,474 |
292 |
|
9-Jun-21 |
15,324 |
733,979 |
356 |
|
2-Jun-21 |
14,990 |
526,371 |
388 |
|
26-May-21 |
22,272 |
825,830 |
444 |
|
19-May-21 |
27,919 |
1,069,026 |
520 |
|
12-May-21 |
34,858 |
1,281,409 |
556 |
|
5-May-21 |
45,480 |
1,479,189 |
587 |
|
28-Apr-21 |
52,023 |
1,514,151 |
619 |
|
21-Apr-21 |
61,070 |
1,534,491 |
629 |
|
14-Apr-21 |
68,640 |
1,789,015 |
646 |
|
7-Apr-21 |
64,729 |
1,614,500 |
618 |
|
31-Mar-21 |
64,394 |
1,398,416 |
700 |
|
24-Mar-21 |
57,227 |
984,272 |
737 |
|
17-Mar-21 |
53,626 |
1,040,359 |
859 |
|
10-Mar-21 |
54,181 |
971,702 |
1,121 |
|
3-Mar-21 |
60,981 |
930,718 |
1,357 |
|
24-Feb-21 |
64,943 |
856,620 |
1,729 |
|
17-Feb-21 |
73,697 |
754,340 |
1,911 |
|
10-Feb-21 |
100,561 |
712,453 |
2,360 |
|
3-Feb-21 |
129,477 |
491,731 |
2,721 |
|
27-Jan-21 |
159,892 |
340,799 |
3,174 |
Sources: Centers for Disease Control and
Prevention Trends in COVID-19 Cases and Deaths in the US, and Trends in COVID-19 Vaccinations in the US.
Note: The U.S. population is 332,703,480.
https://www.americanactionforum.org/weekly-checkup/medicares-fiscal-reckoning-is-still-coming/#ixzz75r7LlOFa
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