In the United States, Medicare is a federal health insurance program mainly for people aged 65 and up, but it also covers some younger people with disabilities or certain health conditions.
Over 63 million Americans are covered by the program, which has been having more money problems lately because of rising health care costs and an aging population.
Current state of Medicare
Recently, there have been worries about Medicare’s ability to stay solvent and fully pay for future beneficiaries’ benefits without major changes or more money. In 2023, Medicare spent a total of $1,014.6 billion. Medicare is mostly paid for by two trust funds:
- The Hospital Insurance (HI) Trust Fund, which pays for Medicare Part A services (hospital stays, skilled nursing care, etc.), is primarily funded through payroll taxes on earnings (1.45% from employees and employers, with an additional 0.9% tax on higher income earners). The HI trust fund also pays for Medicare administrative costs. Their total 2023 expenditure amounted to over $403 billion.
- The Supplementary Medical Insurance (SMI) Trust Fund, which covers Part B (outpatient care) and Part D (prescription drugs), is funded through premiums paid by beneficiaries and general revenue from the federal government.
The Medicare Trustees Report says that the HI Trust Fund will run out of money by 2031, starting in 2023.
If nothing changes, this means that the fund will only be able to pay about 90% of Part A benefits after that year, relying mostly on the payroll taxes that are already being paid.
This makes people worry about how to keep Medicare’s spending in line with its income, especially since healthcare costs and the number of older people are both rising.
Trump’s plans for Medicare
President Trump promised to make Medicare more stable and extend its life during his first term in office. But Trump has said before that he wants to get rid of the Affordable Care Act (ACA), which could have a big effect on how long Medicare covers people.
Many people are curious about what his plans are for Medicare now that he is the 47th president of the United States.
Trump has said that he does not want to cut benefits but does want to change how long Medicare lasts. I am going to fight for Social Security and Medicare and keep them safe.
Trump said, “There will be no cuts, and we will not raise the age like they are going to do.” If Medicare is not to run out of money in the next ten years, it will likely need to be reformed.
Medicare needs immediate reforms
Medicare is still an important program for many Americans, but its long-term financial stability is at greater risk because of rising costs, an aging population, and not enough money coming in to cover future costs.
Immediate fixes like raising taxes, changing who can get help, and cutting back on some services may help, but the program needs a more comprehensive approach to make sure it can keep working well in the years to come.
Finding a balance between the needs of a growing and aging population and the program’s ability to last is the hard part.
It is not just Medicare that needs changes in the way it works. Also, Social Security funds are expected to run out by 2035. Most experts agree that either taxes need to go up or benefits need to be cut to make the funds last longer.
Since more Baby Boomers are retiring and living longer, more people will be getting benefits while fewer people are working and paying payroll taxes to pay for these programs.
In the end, Trump left Medicare and Social Security with a lot of unknowns. Even though he said over and over that he would not cut benefits, his tax policies and efforts to cut government spending on health care programs made the federal budget even tighter.
In the long run, his administration’s fiscal policies are still being felt. For example, policymakers are still very worried about the future of Medicare and Social Security. It is still not clear what effect his second term will have on these programs.
