Medicare Finances: Findings of the 2011 Trustees Report

Health Policy Brief No. 2 ~ May 2011

Summary: Each year, the Trustees of the Medicare program issue a report on the expected condition of the program’s two trust funds over a 10-year (short-term) and a 75-year (long-term) period. The 2011 report projects that Medicare’s Hospital Insurance (HI) Trust Fund will remain solvent until 2024, at which time projected annual income will cover 90 percent of expenditures. This year’s report decreases the date of solvency by five years.

The Trustees Report will spur further debate over Medicare expenditures and the federal debt. Although the passage of the Patient Protection and Affordable Care Act (ACA) in 2010 significantly improved the financial condition of Medicare’s HI Trust Fund, some contend that Medicare must be fundamentally restructured in order to improve the fiscal condition of the program and reduce its projected share of federal spending. Others point out that Medicare spending is influenced by the same factors that drive private sector health care spending; policies to limit Medicare spending without addressing dysfunctions in the larger health care system would shift costs to beneficiaries and reduce access to care for the aged and disabled.