If you want to read something long, complex and depressing, the annual Trustees report to Congress on the status of the funds underlying Medicare’s benefits will fit the bill. More Americans should read these. The Medicare program eats up lots of government spending and as the population ages, keeps growing rapidly. The epidemic gave a perverse reprieve to the program, as lots of beneficiaries died from the virus, lowering overall spending by 1.5% in 2020 and 3% in 2021. The Trustees anticipate that normal health spending patterns will return by 2023, but that there will some lingering benefit of the early loss of high-cost beneficiaries during the epidemic. But the report also notes the unknown impact of inflation on what Medicare will have to pay providers. Medicare pays significantly less than private health plans, but there is political pressure from providers to increase payments. If those increases occur, Medicare spending will rise substantially.
In 2021 Medicare covered 64 million people, many supposedly disabled, which is a scandal in itself, and spent $840 billion. 43% of beneficiaries were in a Medicare Advantage plan. The rise of MA plans and enrollment will lead to significant changes to Medicare in the next five years, when those plans cover a majority of beneficiaries. The program had $888 billion in income in 2021, from payroll taxes and premiums for Part B outpatient services and Part D drug coverage.
This year’s report is a little more encouraging than some others, as the dates for going broke are pushed out slightly. But the looming recession and our other fiscal woes make it likely that in future years, the depletion of the trust funds will be pulled forward. The report gives a lot of useful data on health spending in the US and notes various trends that impact the provision of health services and products. Right now the hospital fund is expected to be depleted by 2028, two years later than projected last year, and the Trustees encourage Congress to address the issue quickly. Good luck with that. Part B and D fund is in better shape, but that is largely because beneficiaries pay a substantial part of the cost, and the amounts they pay are rising rapidly. (Trustees Report)