The Medicare program’s trustees recently released their annual financial report. The report is similar to last year’s, and like last year, it again serves as a serious wake-up call that the finances for the program are not going well. In general, the growth of health care spending far outpaces inflation and economic growth in the United States.
In 2018, Medicare’s costs consumed 3.7 percent of the country’s gross domestic product (GDP). The trustees project this number to increase to 5.9 percent of the economy by 2038. After 2038, spending is estimated to increase to 6.5 percent of GDP. In addition, the Medicare Federal Hospital Insurance Trust Fund, which pays for Medicare Part A hospital care, will run out of money by 2026.
To successfully address the shortfall, either Medicare payroll taxes would need to increase by 30 percent or spending in the program would need to decrease by 20 percent. In other words, workers would see their taxes increase significantly or hospitals and doctors would experience a dramatic drop in income.
The irony is that despite looming financial failure, leftists are clamoring that a single-payer system—or as they like to call it “Medicare for All”—be imposed on the entire country. The current Medicare program enrolls 15 percent of the U.S. population. For a single-payer plan to have a chance of surviving, the necessary astronomical increase in taxes would choke the economy. In addition, provider payments would sink so low that very few talented people would be attracted to health care. This would lead to a decrease in the quality of care nationwide.
The existing Medicare program is an insurance plan for seniors 65 and older. It is indeed popular with Americans. However, as the trustee report shows, it must absolutely be reformed to remain viable. At some point, our elected officials must face reality and tackle Medicare’s runaway spending. We cannot afford to have them defer the issue to a future Congress.
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05.09.2025