FACT: Medicare is not facing a financial crisis. Politicians pushing Medicare reforms often claim that the program is teetering on the brink, but the NASI researchers conclude otherwise.
Let us start with the basics on how Medicare’s various “parts” are funded. Part A (hospitalization) is funded mainly by a 2.9 percent payroll tax split by employers and workers. For Parts B (outpatient services) and D (prescription drugs), 75 percent of funding comes from general federal revenue, with the remainder funded by enrollee premiums.
The Hospital Insurance trust fund that finances Part A can meet all its obligations through 2028, according to the program’s trustees. At that point, incoming revenue would cover 87 percent of expected costs, so there is a need to close the shortfall with additional revenue, less spending or a combination of the two.