Medicare Hospital Insurance Trust Running Out of Funds

The Medicare Board of Trustees released the annual report measuring the stability and success of the program, as well as the current state of the Hospital Insurance Trust Fund and the Supplementary Medical Insurance (SMI) Trust Fund, the two main sources of financial coverage for beneficiaries, and warned that the Hospital Insurance Trust Fund will only be able to cover 89% of total costs by 2026.

The Hospital Insurance Trust Fund, which covers beneficiaries’ inpatient hospital care is running out of money and the board projects that effects will begin to be felt in only 7 years. Total Medicare expenditures were $741 billion in 2018, 3.7% of the gross domestic product, and the board prognosticates that by 2093, Medicare will account for 6.5%.

Health care costs are under constant scrutiny, especially with the upcoming election season at hand. Current political rhetoric includes the concept of Medicare for All but many officials have stated that the concept’s costs outshine the benefits.

“At a time when some are calling for a complete government takeover of the American health care system, the Medicare Trustees have delivered a dose of reality in reminding us that the program’s main trust fund for hospital services can only pay full benefits for seven more years,” said Seema Verma, administrator for the Centers for Medicare & Medicaid Services in a statement.

The SMI trust, which covers drug costs for Part B and Part D, was reported to be in better shape despite continued rises in costs and number of beneficiaries, due to the baby boomers coming of coverage age. Costs are expected to grow from 2.1% of the GDP in 2018 to about 3.7% in 2038.

The report from the board also predicted that Social Security funds could be depleted by 2035, a blow many retirees could feel in the form of potential reductions in payouts. —Edan Stanley