Medicare
Medicare is a national social insurance program, administered by the U.S. federal government, that guarantees access to health insurance for Americans ages 65 and older and younger people with disabilities as well as people with end stage renal disease. Medicare offers all enrollees a defined benefit. Hospital care is covered under Part A and outpatient medical services are covered under Part B. Medicare Part D covers outpatient prescription drugs. According to the 2012 Medicare Annual Report, the Trustees project that Medicare costs will grow substantially until Trust fund exhaustion occurs in 2024. This model is obviously in need of urgent repair.
2012 Medicare Annual Report
4/24/12
2012 Annual Report of the Trustees of the Medicare Trust Fund

Summary:

The Medicare HI Trust Fund faces depletion earlier than the combined Social Security Trust Funds. The Trustees project that Medicare costs will grow substantially from approximately 3.7 percent of GDP in 2011 to 5.7 percent of GDP by 2035, and will increase gradually thereafter to about 6.7 percent of GDP by 2086. The HI fund again fails the test of short-range financial adequacy. The fund also continues to fail the long-range test of close actuarial balance. The Trustees project that the HI Trust Fund will pay out more in hospital benefits and other expenditures than it receives in income in all future years, as it has since 2008. The projected date of HI Trust Fund exhaustion is 2024.

Conclusion: Lawmakers should address the financial challenges facing Medicare as soon as possible. Taking action sooner rather than later will leave more options and more time available to phase in changes so that the public has adequate time to prepare.



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