Report Says Medicare Part A Fund will be Depleted in 2026

Is it even possible that Medicare Part A Fund will be Depleted by the year 2026.

“Substantial steps” needed to fix this Medicare Part A situation

The Board of Trustees for Medicare just released its 2018 Annual Report with the chilling news that the Medicare Part A hospital trust fund is going to be depleted in 2026, three years earlier than originally predicted. Here’s some background on the situation and what led to this dire projection.

Learn all about Medicare Part A benefits by clicking here.

The formal name of the report explains – in rather convoluted English – what the Board of Trustees does. “2018 Annual Report of the Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds.” The board was formed by Social Security to oversee the two types of Medicare insurance.

The two funds

The Hospital Insurance Trust Fund (HI) is for Medicare Part A, covering costs for hospital care, some hone health services, skilled nursing facilities and hospice care. So HI = Medicare Part A.

The Supplementary Medical Insurance Trust Fund (SMI) deals with Part B, “medical insurance,” and Part D, prescription drug coverage. So SMI = Part B + Part D.

The monetary problem is with the HI fund.

Outflow is more than income

The problem in a nutshell: In 2017, expenditures were $710 billion while income was $705 billion.

There are a couple of significant events that led to this shortfall. One of the problems is the reduction in financing. Recent tax cuts have resulted in reduced payments into the fund. This was caused by a combination of lower wages, thus lower payroll taxes, and lower taxes on Social Security benefits.

The other factor is the aging population is putting increasing demands on the system. This will continue to increase as baby boomers reach the age of Medicare eligibility.

Action is needed

The report suggests that “substantial steps” must be undertaken soon to address this challenge and ensure that HI is sufficiently funded. However, an article by PBS News Hour says the report “serves as a reminder of major issues left to languish while Washington plunges deeper into partisan strife.”

The Trustees’ report is a wake up call for all Medicare beneficiaries. The depletion of HI is not an option. This challenge should be taken up by Congress as a major issue immediately. The report is fair warning for legislators to fix the crisis.

By the way, in related news, the report reiterated that Social Security will be insolvent by 2034. It might help somewhat if the government paid back the money it has borrowed from the Social Security Trust Fund.

Did you know that, according to the Huffington Post, Social Security is the largest single holder of U.S. debt – close to 18 percent? The government owes Social Security twice as much as it does to China and Hong Kong.

Medicare and Social Security are safety nets for millions of Americans, nets they have paid for over their years of employment.

How many people would be affected by the HI depletion? In 2017, 58.4 million people were covered – 49.5 people aged 65 or older and 8.9 million disabled people. This number will increase significantly by 2026.

Attention must be paid to this huge issue that Medicare Part A is going to have!


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