The headline from the 2018 Medicare Trustees Report was that the program’s Hospital Insurance trust fund will run out of money in 2026, three years earlier than was estimated last year. That headline suggests that Medicare is facing increasing financial troubles. In fact, the outlook for program costs is considerably more favorable than it was a decade ago, and that picture persists even under an alternative scenario in the Trustees Report that assumes that Congress phases out some of the cost controls in recent legislation.
That’s according to a new Issue in Brief published by the Center for Retirement Research at Boston College that examined America’s largest health insurance program, which provides coverage for individuals 65 and over and most disabled citizens.
“That said, Medicare does face significant financing challenges,” commented the Brief’s authors. “It operates in a country with extraordinarily high health care costs; its out-of-pocket expenses take a large and growing share of Social Security benefits; and it has some serious gaps in protection.”
U.S. health care costs as a percentage of gross domestic product (GDP) are the highest in the developed world driven by high salaries for doctors, high drug prices, high administrative costs, and greater usage of certain procedures. These broader market pressures make Medicare an expensive program.
“It also means that the only real way to control Medicare costs is to get national health care spending under control,” said the Brief’s authors.