Trustees Report: Medicare Already At Risk For Today’s Seniors

WASHINGTON – As some politicians debate proposals to open up Medicare to younger Americans, a new report from the program’s trustees provides yet another reminder that Medicare is already at risk for today’s seniors, who depend on it for access to affordable, high-quality health care.

Medicare Is At Risk For Today’s Seniors

• Medicare will be unable to fully pay for seniors’ inpatient treatment at hospitals by 2026, the trustees warn. That projection remains unchanged from last year’s report, meaning the program’s hospital trust fund is one year closer to insolvency. (CMS, 8/31/21) 

Opening Up Medicare To Younger Americans Could Bankrupt the Program

• Implementing “Medicare at 60” in 2022 could hasten the depletion of the trust fund and cause its bankruptcy by 2024, two years sooner than currently projected, putting seniors’ access to care at risk. (Lanhee J. Chen, Ph.D., Tom Church, and Daniel L. Heil, 6/23/21) 

“Medicare at 60” Could Create Unaffordable New Costs, Tax Increases & Higher Deficits

• Enrolling in Medicare could result in higher costs for 60- to 64-year-olds that could otherwise be avoided through existing coverage options.
  • 1.3 million individuals who would qualify for “Medicare at 60” are currently covered by a plan on the current marketplaces. Nearly 70 percent of this group currently receive subsidies and could end up paying more after transitioning to Medicare. (Lanhee J. Chen, Ph.D., Tom Church, and Daniel L. Heil, 6/23/21) 
  • Lowering the Medicare eligibility age would likely benefit mostly higher-income people, because Obamacare covers needy people at low or no out-of-pocket cost. (The Washington Post, Editorial, 8/29/21)
  • In addition to Medicare premiums potentially costing more than plans from the Marketplace, the new Medicare plans could have higher cost-sharing requirements and add increased costs to families that are split between Medicare and Marketplace plans. (Lanhee J. Chen, Ph.D., Tom Church, and Daniel L. Heil, 6/23/21) 
     
• Financing “Medicare at 60” may mean various tax increases. 
  • Congress could raise the additional Medicare tax rate by 285 percent in 2022. (Lanhee J. Chen, Ph.D., Tom Church, and Daniel L. Heil, 6/23/21) 
  • Congress could also raise the standard Hospital Insurance (HI) tax, which would impact many more Americans. In 2022, the tax rate would need to be 3.25 percent—a 12 percent increase in the current rate. (Lanhee J. Chen, Ph.D., Tom Church, and Daniel L. Heil, 6/23/21)  
     
• Already, Medicare is the second-largest single line item in the federal budget. It will soon surpass Social Security and grow more quickly than every other component. Under “Medicare at 60,” gross Medicare expenditures would rise by $82.9 billion in 2022 and total Medicare spending could rise by $995 billion over 10 years. (Lanhee J. Chen, Ph.D., Tom Church, and Daniel L. Heil, 6/23/21) 
  • A separate estimate from economists at the Committee for a Responsible Federal Budget (CRFB) finds lowering the Medicare age to 60 would cost $200 billion over 10 years. (Committee for a Responsible Federal Budget, 8/31/20)
     
• Overall, the federal deficit would rise by $32.2 billion in 2022 and $393.9 billion over the next 10 years (2022 to 2031). (Lanhee J. Chen, Ph.D., Tom Church, and Daniel L. Heil, 6/23/21) 

At a time when Americans have access to affordable, high-quality health coverage options through existing plans and programs, policymakers should work to build on and improve what’s working in health care – not put seniors’ Medicare at greater risk by opening the program up to younger Americans.

• To learn more about the Partnership for America’s Health Care Future, CLICK HERE.