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Medicare Sustainability

Medicare provides health care coverage to more than 62 million older adults (aged 65 or older) and adults with disabilities in the United States. To ensure Medicare is there when people need it, the program must be affordable and fiscally sustainable for the long run.

Medicare is on an unsustainable path. A large and growing share of federal spending, Medicare is projected to consume almost one-fifth of the federal budget in the next decade. Medicare spending is increasing due to rising per capita health care costs and the aging of the baby boomer generation — which is causing an unprecedented number of individuals to enroll in Medicare. This creates fiscal challenges for the program. Even within the next five years, components of the Medicare program face insolvency. Medicare’s Hospital Insurance trust fund, which pays for health care services related to beneficiaries’ stays in hospitals, skilled nursing facilities, and hospice, is projected to run out of money in 2026. This means Medicare will no longer be able to fully pay for these services, and health care coverage and access for millions of Medicare beneficiaries will be at risk.

We aim to sustain Medicare for the future by working toward policy changes that would bring the program’s spending and revenue in line while ensuring the program continues to meet beneficiaries’ needs. This will require a balanced approach of spending reductions and tax increases. We are supporting research and policy work that focuses on: reducing overpayments to certain providers and Medicare Advantage plans, improving efficiency and competition throughout the program, and strengthening Medicare’s financing. These changes would help shore up the program in the near-term and improve its long-term sustainability.

2026
Projected date of insolvency for the Hospital Insurance Trust Fund that funds Medicare Part A Source
7%
Percentage Medicare spending is projected to grow annually over the next decade (compared to 4% in GDP annual projected growth) Source
18%
Percentage of total federal spending Medicare is projected to consume by 2029 Source
$1.3T
Total amount of dollars the Medicare program is projected to spend in 2030 Source

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