Medicare Will Remain Solvent Through 2026 According to New Report

Medicare - Stock ImageAccording to a blog post released on earlier today (link below), the Medicare program is expected to remain solvent two years longer than expected.

According to the Medicare Trustees, the Medicare program should remain solvent through 2026. In 2012, the Medicare Trustees were projecting that the program would become insolvent by 2024.

The Obama administration said that there are two major reasons behind the two year reprieve - a stronger economy and slowing growth in health spending. The Medicare trustees said that spending for skilled nursing homes and private Medicare Advantage plans is projected to be lower than expected.


One of the trustees, Robert Reischauer, warned against looking too much into the two year extension of solvency for the Medicare trust fund, due to the fact that projections for future Medicare spending are highly uncertain.


What happens after 2026 if no changes are made?

Without any more money in the trust fund, Medicare would only be able to pay out what it brings in. According to multiple media reports, this would result in just 87% of costs being covered after 2026. By 2050, this number would drop to 50%, if no changes were made.

In order to match income to expected costs over the next 75 years, the Medicare tax would reportedly have to rise from 2.9% to 4.01% on all wages, or Medicare benefits would need to be cut by 23%.


In short, don't get too excited, as the country is still about a decade and a half away from the Medicare trust fund becoming insolvent.

Source: - Medicare Trustees: Medicare is Growing Stronger, with Help from the Affordable Care Act

Filed under: General Knowledge

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