The cold, hard, actuarial truth is that within five years, the trust fund that funds Medicare hospital coverage (Medicare Part A) will have a zero balance.
Both sides are misleading people.
President Joe Biden is accusing Republicans of wanting to cut Social Security and Medicare. He says he’ll protect these key pillars of the social safety net.
Republicans, while they do want cuts to deal with “runaway” Washington spending, have promised they won’t touch Social Security and Medicare (or defense spending).
Biden’s promise – focused on Florida Sen. Rick Scott’s fanciful proposal to require federal laws, including those safety net programs, to expire after five years if they are not renewed by Congress – seems completely political.
Republicans’ promise to make cuts without touching the safety net or the Pentagon seems mathematically impossible.
The cold, hard, actuarial truth is that we don’t need Scott’s plan to force a debate over Medicare funding, because within five years, the trust fund that funds Medicare hospital coverage (Medicare Part A) will have a zero balance.
That’s right. In their annual report, released last June, Medicare’s trustees reported that the hospital insurance trust fund will bring in $412.6 billion in 2023. It will spend $415.6 billion. That means it will spend $3 billion more than it generates in revenue this year.
The hospital insurance trust fund will be completely gone by 2028, which means the government has five years to change the equation. Read the Medicare trustees report.
An ever-so-slightly more optimistic view from the Congressional Budget Office is that the hospital insurance trust fund will be depleted by 2030.
Here’s what the trustees say: “If assets were depleted, Medicare could pay health plans and providers of Part A services only to the extent allowed by ongoing tax revenues—and these revenues would be inadequate to fully cover costs. Beneficiary access to health care services could rapidly be curtailed.”
That’s short on specifics, but it’s clear Medicare is warning that without the trust fund, some services would be cut quickly.
