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New BPC Report Shows the High Cost of Waiting to Fix Medicare's HI Trust Fund

Washington, DC – Today, the Bipartisan Policy Center released an analysis of five policy proposals to shore up the Medicare Hospital Insurance (HI) Trust Fund, currently projected by the Congressional Budget Office to deplete its reserves in 2026. The analysis, in all cases, demonstrates that the longer Congress waits to act, it will force harsher cutbacks to Medicare beneficiaries and cost the program hundreds of billions of dollars.

“Congress unfortunately has a bad habit of waiting for a crisis to occur before taking needed action. The complete depletion of the HI Trust Fund in just five years, a program that supports over 60 million Americans with their hospital bills, is a clear crisis that cannot wait,” said BPC Senior Vice President Bill Hoagland. “Ensuring that the fund remains solvent will require that this administration and Congress act sooner rather than later. The longer they wait, the more difficult both programmatically and politically the solutions will be. A simple general revenue transfer into the fund would be a band-aid that will not fix the program’s structural problems.”

In the report, The Cost of Waiting to Act on Medicare’s Hospital Insurance Trust FundBPC reviewed a set of ideologically diverse policy proposals against two discrete measures of impact: projected date of fund insolvency and projected status of fund reserves at the end of 2030. The analysis also compared impacts from immediate implementation in 2021 to impacts from implementing the same measures four years later, in 2025.

For example, if Congress implemented the “Balanced Approach” proposal in 2021, the trust fund would hold a balance of $240 billion in 2030 and extend the trust fund’s positive balance through 2034. If the same policies are implemented in 2025, the trust fund would hold a mere balance of $28 billion in 2030 and deplete its reserves in 2031.

Overall, these results show that there are solutions available to Congress to dramatically improve the trust fund’s finances, but waiting carries a real cost: the later a policy is put into effect, the less impact it will have on shoring up the Medicare HI Trust Fund.

Read the report

 

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