(A version of this Health Alert was published by RealClearPolicy.)
Every year, the Medicare Trustees issue a report on the program’s financial status. Reaction to the last few years’ reports has been complacency. Because Medicare’s fiscal problems do not appear to be getting worse, people have the misconception that Medicare’s finances are improving. Nothing could be further from the truth.
Indeed, the Trustees themselves insist that: “Notwithstanding recent favorable developments, current-law projections indicate that Medicare still faces a substantial financial shortfall that will need to be addressed with further legislation. Such legislation should be enacted sooner rather than later to minimize the impact on beneficiaries, providers, and taxpayers.”
In 2014, Medicare’s taxes and premiums added up to $342 billion dollars, just 11 percent of federal tax and fee revenue of a little over $3 trillion. However, its spending of $600 billion comprised 17 percent of $3.5 trillion of federal spending. This is just short of defense and security-related spending, which amounted to $615 billion.