Solvency Boost: Medicare Gets Five More Years

Washington, DC – The latest annual report from the Board of Medicare Trustees brings promising news for Medicare’s Hospital Insurance (Part A) trust fund. Projections now indicate that the trust fund’s depletion is delayed until 2036, a significant extension from the previous estimate of 2031. 

“This updated projection, extending the trust fund’s solvency by an additional five years, provides a temporary relief,” said BPC Senior Vice President Bill Hoagland. “However, it is imperative that policymakers prioritize the long-term financial sustainability of the Medicare program. Congress must take action to prevent severe cuts or changes that could impact the millions of Americans reliant on Medicare.”  

While any extension in solvency is a positive development, without reforms, Medicare can only guarantee full payment of scheduled benefits for approximately 12 more years. Indeed, the U.S. population is rapidly aging, and Medicare spending in recent years has consistently outpaced dedicated revenue streams. Our 2023 report, Sustaining and Improving Medicare: The Path Forward, calls for Congress to tackle the imminent insolvency and affordability challenges through a two-phase approach. Phase 1 involves slowing spending increases, boosting revenues, and concurrently improving Traditional Medicare for beneficiaries. Phase 2 proposes establishing direct, fair competition between Traditional Medicare and Medicare Advantage, allowing beneficiaries to compare a standard set of benefits.

BPC also calls on the Senate to promptly consider the Social Security and Medicare public trustees. Despite the Senate Finance Committee’s approval of two nominees in November of 2023, a full Senate vote is necessary. These positions have been vacant since 2015, which has hindered the trustees’ vital role in providing objective oversight and credibility for the annual trust fund reports. 

Bill Hoagland and Marilyn Serafini are available for further comments.