05.07.2024 Health
Meaningful Reforms Need to be Enacted Sooner Rather Than Later to Protect Medicare Program
Statement from Mark E. Miller, executive vice president of health care at Arnold Ventures, after the release of the annual Medicare Trustees Report.
Washington, D.C. (May 7, 2024) — “The release of the 2024 Medicare Trustees Report brings some good news, but the fact remains clear: substantial reforms are necessary to strengthen and protect the program, which is relied on by more than 65 million seniors and people with disabilities.
The report projects the Hospital Insurance (HI) Trust Fund will be insolvent in 2036, five years later than projected last year. This later date is mostly due to projected increases in the number of workers and average wages – not because of any structural changes to strengthen solvency.
Spending for services paid for by the HI Trust Fund will start exceeding revenue after 2029, and once the HI trust fund is depleted in 2036, Medicare would only be able to pay hospitals 89 cents on the dollar. It would take a roughly 3% increase in revenue or an 8% decrease in spending to avoid a shortfall.
Overall, the Medicare program continues to face significant fiscal challenges. Spending across all parts of the Medicare program is expected to grow – largely driven by rising per-capita spending – rather than beneficiary enrollment growth. Over the next 10 years, spending will grow annually by 6.7% in Part A, 8.2% in Part B, and 6.4% in Part D, far outpacing GDP growth of 4.2% over the same period. Part B and D are deficit-financed, and this growth places an increasingly large burden on taxpayers and people on Medicare who will pay higher premiums, prompting the Trustee’s to issue a formal Medicare funding warning for the seventh consecutive year.
More and more Americans depend on the care they receive through Medicare. This is a strong reminder that now is not the time to let up pressure on Congress and the administration to enact meaningful reforms. Improving the program’s fiscal outlook will require a comprehensive and balanced approach that reduces wasteful spending, including overpayments to Medicare Advantage plans, and strengthens the program’s financing. Such reforms are crucial for preserving the program’s fiscal sustainability for future generations.”
Read our full analysis here.
Arnold Ventures is a philanthropy dedicated to tackling some of the most pressing problems in the United States. It is a team of more than 120 subject-matter experts headquartered in Houston with offices in New York and Washington, D.C. It works in five key issue areas: Criminal Justice, Education, Health, Infrastructure, and Public Finance. Its work is guided by Evidence-Based Policy, Research, and Advocacy.
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