The Covid-19 pandemic has claimed another victim: Medicare’s trust fund. The Congressional Budget Office released a report Wednesday projecting that Medicare’s federal Hospital Insurance Trust Fund, which helps pay for Medicare beneficiaries’ hospital bills, will be insolvent by fiscal year 2024. That means there won’t be enough money in the trust fund to fully pay hospitals, doctors, and nursing homes for the care they provide to Medicare beneficiaries.

These projections describe a crisis for Medicare, a program that, together with Social Security, form the bedrock of our country’s retirement safety net and assure that millions of older adults can get the health care they need.

Concerns about the Medicare trust fund are not new. Insolvency projections for the trust fund have varied over the years, but the outlook has not been this dire since 1971. Before the Covid-19 pandemic, Medicare trustees had projected that the trust fund would become insolvent in 2026. That time frame has accelerated as payroll tax revenue flowing into the trust fund in the next few years is anticipated to be far lower due to the economic recession resulting from the pandemic.

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At the same time, health care costs and money flowing out of the trust fund are similar to pre-pandemic levels. In addition, per-enrollee payments, which pay for each person covered regardless of how much health care that person uses, and which play a growing role in Medicare, blunt any reduction in health care spending.

Notably, neither candidate for president has mentioned the Medicare trust fund, much less how they would solidify Medicare’s future. Perhaps that is because while Medicare is an important issue for voters, there are a limited number of options for addressing the trust fund’s solvency, none of which are easy choices during normal times, much less during a recession with an ongoing pandemic.

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Regardless of who is elected president, come January his administration and Congress will need to develop a plan to address Medicare’s solvency, and decide who will pay to extend it.

The choices for doing so fall into a few broad categories:

  • require Medicare beneficiaries or taxpayers to pay more to support the program
  • pay health care providers less for the care they provide to beneficiaries
  • or increase how much the federal government spends on Medicare.

All of these options have significant drawbacks. With unemployment at its highest level since the Great Depression, Americans likely will have little appetite for new or higher taxes or paying more for Medicare services. Providers have suffered financially during the pandemic and paying them less is also likely to be unpopular. And increasing government spending on Medicare means either increasing the country’s debt or making cuts to other federally funded programs.

There are possible workarounds for these challenges. Taxes could be raised on wealthier Americans, though that might be politically challenging and insufficient on its own to achieve enough savings. Cuts to provider payments could be targeted to those on firmer financial footing or take place in the form of initiatives that improve the efficiency of care.

Lawmakers will likely need a multipronged approach that includes a combination of options to generate enough savings and meaningfully extend the solvency of the trust fund. The sooner lawmakers can lay a road map toward Medicare solvency, the more it will help beneficiaries, their families, and health care providers plan for the future.

Gretchen Jacobson is vice president for Medicare at the Commonwealth Fund.

  • It has been found by many researches that the upper-middle class benefit more individually and as a whole through Medicare, this means we have to take a serious consideration how to truly deliver service to those who indeed can’t afford.

  • I do not understand why the income level for the cut off of taxes for Medicare and Social Security cannot be raised. It has always seemed to me to be another tax break for the rich. If the tax applied to ALL earned income, the rate could be lowered and lower income people would no longer be paying a higher percentage of their income for these necessary taxes than higher income earners.

  • There is another solution. Congress could pass a national single payer bill–an Improved Medicare for All–which would solve the financing problem for Medicare and for the entire health care system. Medicare has been undermined by the privatization of the Medicare Advantage plans which waste billions of Medicare’s money while penny-pinching on care. The U. S. pays about double, per person, what the health systems of other industrialized countries spend, yet our outcomes fall short and we’re not getting the care. The best solution is to remove the private for-profit insurers and hospitals and the waste they cause allowing us to use our funds to provide patient care. It’s the right thing to do–practical, humane, efficient. Check out the Physicians’ proposal for a National Health Program here: https://pnhp.org/what-is-single-payer/physicians-proposal/

    • I’m a health insurance broker, and I don’t know where you get your information from. Medicare-For-All would put the entire burden of healthcare on the taxpayers, or do you think the government just needs to keep printing money?
      If Medicare Advantage was used as a boilerplate for all states using Medicare funds as they do now with more insurance company funds, there would be relief for taxpayers with adequate care. Currently Medicare pays 80% of eligible expenses….for someone with a $100,000 bill, Medicare is on the hook for $80,000…with $20,000 going to insurance. With Medicare Advantage, each insurance company gets approx $10,000 from Medicare for each member, and they must manage the $90,000 balance, with a small portion going to the member. If more claim liability is given to insurance companies instead of the government, you’ll see relief that you’re looking for in the system….without turning to the socialist agenda of Medicare-For-All!

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