Medicare is not “Going Broke”

Medicare is not in crisis. It is on solid financial footing, and, in fact, is stronger than was predicted before the enactment of the Affordable Care Act.

Medicare Part A is mostly paid for with payroll taxes which go into a trust fund. Prior to the enactment of the ACA, the Part A trust fund was expected to be insolvent in 2017. As a result of the ACA and the recession, the trust fund is not expected to be insolvent until 2028.[1]  However, even if Medicare Part A were to become insolvent by spending more than it is taking in, the program will still be able to pay out 87 percent of its benefits.[2]  While not ideal, this is a far cry from “bankruptcy.”  Further, the date of projected insolvency is not set in stone, and could easily change. The trust fund largely reflects the health of the economy. At various times since 1970, the trustees have projected Trust Fund insolvency in as few as 4 years or as many as 28 years.[3]

Importantly, funding for Medicare Part B and Medicare Part D comes from beneficiary premiums and the government’s “General Fund” –  they are a federal budget item, just like, for example, the Defense Department. Whether to, and how much to, fund these items is a purely political decision.

Let’s not let our elected officials make the wrong decisions about Medicare.