You may have heard that Medicare is projected to run out of money by 2031, which is about eight years from now. While this isn’t entirely accurate, the program is facing headwinds that should concern anyone who relies on Medicare or is approaching the age of 65 for enrollment.
Financial Challenges Facing Medicare
Medicare is facing financial challenges due to several factors. Among these factors are: the growing number of older American citizens eligible for Medicare and living longer; a declining number of younger workers paying payroll taxes for Medicare; advanced medical technology; and expensive new drugs.
Future Projections for Medicare
Despite polls showing that Medicare is very popular among Americans, 74% of beneficiaries surveyed express concern about the long-term sustainability of the program. However, 97% do not want to see any changes to Medicare that could affect them. Most respondents believe that significant changes should be made to ensure Medicare’s availability for future generations and that those who have not yet reached Medicare eligibility will need to pay more or accept reduced benefits to maintain the program’s stability.
Projected Bankruptcy Challenges in 2031
The Board of Trustees for Medicare earlier this year predicted that the trust fund for Medicare Part A will be exhausted by 2031. This part pays for hospital visits, nursing home care, and some home healthcare visits. Most of its revenue comes from payroll taxes: a 2.9% tax on earnings, with an additional 0.9% for individuals earning more than $200,000.
Solutions to Medicare Stability Issues
Several alternatives have been proposed to bolster the Medicare trust fund and the program overall. Among these alternatives are:
Increasing Medicare Payroll Taxes
In the 2024 budget, President Biden proposed increasing the Medicare tax rate on earned and unearned income above $400,000 from 3.8% to 5%. He also called for closing loopholes that allow some high-earning professionals and wealthy business owners to shield some income from the Medicare payroll tax.
Raising the Medicare Eligibility Age
There is a proposal to gradually raise the Medicare eligibility age, possibly to 67 or 70. Some believe that raising the eligibility age could increase overall healthcare spending in the U.S. if individuals in their mid-sixties are forced to transition to more expensive private health insurance.
Slowing the Addition of New Procedures to the Medicare Core Benefit Package
Some experts believe that increased spending on new procedures is primarily responsible for the expected rise in the national debt over the coming decades. It has been suggested that approval for coverage of new technologies and treatments be directed by Congress with federal reimbursements to cover their costs.
Making Medicare More Like Medicare Advantage Plans
There is a proposal to shift to a “premium support” system to improve competition among health insurance plans and reduce Medicare costs. The federal government would provide a cash payment on behalf of each Medicare beneficiary to purchase health insurance.
Conclusion
Despite the financial challenges facing Medicare, there are numerous alternatives proposed to enhance the long-term stability of the program. It is crucial to reach viable policy solutions to ensure Medicare’s sustainability and provide healthcare for beneficiaries in the future.
Source: https://www.aol.com/medicare-really-run-money-2031-100000925.html
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