📋 Medicare’s Financial Health Worsens (AARP Article)

 Got Any ideas of how to fix it? 

The Social Security Trustee Report covers this every year just like the health of the Social Security programs - Old Age, Survivors, Disability - They are all part of the same law.  Medicare,Medicaid and Social Security but handled in different ways because they are different programs .

ONLY Medicare Part A has a continuously running Trust Fund that is funded from payroll taxes and contributions from your employer during one’s working years - that’s why Medicare Part A is free of premiums for most people because they have worked under the system long enough to be vested - 40 Quarters.  

Medicare Part B and Part D are month to month/ year by year working Trust Funds only - We pay in premiums and the government puts in their lion share to meet the demand of these two Medicare Parts - That’s why these premiums are adjusted on beneficiaries every year - based on the usage of the previous year.  To keep these Parts of Medicare funded, CMS just UPs the premiums and the government then pays more - so these two programs will never run out of money although people might start to grip about the cost of the premiums. 

From the most recent SS Trustee Report Summary that I posted a few days ago - AARP Community Social Security - 06/18/2025 - Social Security 2025 Trustee Report Summary Has Been Released 

• The Hospital Insurance (HI) Trust Fund will be able to pay 100 percent of total scheduled benefits until 2033, three years earlier than reported last year. At that point, that fund’s reserves will become depleted and continuing program income will be sufficient to pay 89 percent of total scheduled benefits. NOTE:  THIS IS MEDICARE PART A.

• The Supplementary Medical Insurance (SMI) Trust Fund is adequately financed into the indefinite future because, unlike the other trust funds, its main financing sources—enrolled beneficiary premiums and the associated federal contributions from the Treasury—are automatically adjusted each year to cover costs for the upcoming year. Although the financing is assured, the rapidly rising SMI costs have been placing steadily increasing demands on beneficiaries and general taxpayers. NOTE THIS IS MEDICARE PART B and PART D

So what can fix this Medicare problem?  More money but from where?

Options might include and I am just throwing these out for consideration.

• Higher Medicare payroll taxes and matched contributions from the employers during a persons working years - kind of late to count on this to be a fix since 2033 seems to now be the dooms day.  But long term it may have to be done - sorry working younger people.
• Perhaps adding an additional premium for beneficiaries to pay for Part A when they go on Medicare Part A.
• Perhaps reducing the cost of the Medicare Part A program but that would mean looking at benefits - Part A covers INpatient care, rehab following a hospitalization, Hospice 
• Perhaps the deductible for Part A will have to go higher - but it is already over $ 1600 PER BENEFIT PERIOD - and then of course, many will want their Medicare Supplemental to pick any higher deductible like it does now - of course, at a higher Medigap premium.
• Perhaps add in some cost for those auxiliary benefits like coverage for a stay at home spouse or disabled adult children.

We already tax ALL wages for Medicare Part A - so nothing more that we can do there except raise the rate.  

IDEAS  ??  I am sure that legislators are all ears.  Personally, we may have to do a bit of everything - raise rates on working people, adjust some of the benefits, charge more for any auxiliary or passed on benefits, perhaps a more managed care type plan, raise the deductible, maybe add another deductible for other services  - I don’t really know - but I do know that people will probably grip about any change one way or the other. 

@CBtoo 

The 2010 law is PAYGO or Sequestration and it will come into play but all that means is that provider fees will be reduced by Medicare.  We have been here several times before and Congress just overrides it - so don’t panic.

As far as depleting the Trust Fund sooner - we already did that at the end of 2024 when the Social Security Fairness Act was passed and completely eliminated the WEP and GPO instead of just revising the formula - and this was a BIG BI-partisan move.  Yep, this and of itself moved up the depletion date a few years.  But those folks are happy many pulling in several thousand dollars + an big increase in their benefits going forward.

The NO tax on Social Security benefits did not pass in the OBBB so we are pretty safe that the Trust Fund is not in jeopardy from the extra $6000 senior adjustment that only last for a few years.