2021 Medicare Trustees Report – Healthcare Economist

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The 2021 Medicare Trustees Report–formerly known as the “Annual Report of the Boards of Trustees of the Federal Hospital Insurance Trust Fund and the Federal Supplementary Medical Insurance Trust Fund“–had some grim news. Expenditures ($925.8 billion) exceeded revenues ($899.9 billion) in 2020. More worrying, the estimated depletion date for the Medicare (i.e., Hospital Insurance) trust fund is 2026, The good news is that this is the same year as the previous; the bad news is that Medicare will be in the red very soon as the baby boomers continue to retire. In particular, Medicare expenditures as a share of the US economy are projected to continue to rise.

…the Trustees project that expenditures will increase in future years at a faster pace than either aggregate workers’ earnings or the economy overall and that, as a percentage of GDP, spending will increase from 4.0 percent in 2020 to 6.5 percent by 2095

Note that the projects above are based on current law. Under Medicare Trustees “alternative scenario”, which may be more realistic, the cost will actually rise to 8.5% of GDP in 2095.

Program overview
Medicare covered 62.6 million individuals in 2020. Of these, about 40% were covered by a Medicare Advantage (i.e., Medicare Part C) plan.



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