Medicare Projected to Go Bust in 2017

The 2009 Medicare Trustees Report has been issued and the projections are not good.

In 2008, 45.2 million people were covered by Medicare: 37.8 million aged 65 and older, and 7.4 million disabled. About 22 percent of beneficiaries have chosen to enroll in private health plans that contract with Medicare to provide health services. Total benefits paid in 2008 were $462 billion. Income was $481 billion, expenditures were $468 billion, and assets held in special issue U.S. Treasury securities grew to $381 billion.
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The HI trust fund is not adequately financed over the next 10 years. At the beginning of 2009 the assets of the HI trust fund were $321 billion and are projected to be exhausted during 2017, under the intermediate assumptions. The HI trust fund does not meet the short- range test of financial adequacy. Although the short-range financial status of the HI trust fund has not been considered satisfactory since 2003, the outlook has further deteriorated as a result of the current economic recession.

The SMI trust fund is adequately financed over the next 10 years and beyond because premium and general revenue income for Parts B and D are reset each year to match expected costs. However, further Congressional overrides of scheduled physician fee reductions, together with an existing “hold harmless” provision restricting premium increases for most beneficiaries, could jeopardize Part B solvency and require unusual measures to avoid asset depletion.

 

Trustees Report Summary