History of Medicare Insolvency Predictions Since 1970

Medicare was passed into law on this day, 48 years ago. Today, there is much public debate about how long Medicare will be “solvent.”   In order to contribute facts that will help the discussion, the Ramirez Group presents our Daily Snippet for July 30, 2013:

In almost every year since 1970, Medicare trustees have predicted insolvency.


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That according to data from the Kaiser Foundation, which also shows 33 of the 43 years with predictions of solvency less than 17 years.

According to Paul N. Van de Water of the Center for Budget Policy Priorities, the trust funds for Part B, which covers physicians and other outpatient services; and Part D, which covers outpatient prescription drugs are structured in such a way that the funding and premiums cover the costs and thus the funds cannot become insolvent.

Only the Hospital Insurance (HI or Part A) has the potential of becoming insolvent. Medicare Part A is only considered “insolvent” when revenues and trust funds cannot cover 100% of the costs. Currently trustees predict that revenues and trust funds will only be able to cover 87% of Part A costs in 2026. It should be noted that trustees have consistently predicted such shortfalls since the program began. However, historically presidents and congresses have acted to adjust costs and revenues to keep the program at 100%.