{"id":1380,"date":"2023-04-17T21:27:05","date_gmt":"2023-04-18T01:27:05","guid":{"rendered":"https:\/\/paragoninstitute.org\/index.php\/2023\/04\/17\/op-ed-joe-albanese-national-review-medicare-trust-fund-reform\/"},"modified":"2024-04-18T13:39:21","modified_gmt":"2024-04-18T17:39:21","slug":"medicare-trust-fund-reform","status":"publish","type":"post","link":"https:\/\/paragoninstitute.org\/medicare\/medicare-trust-fund-reform\/","title":{"rendered":"Reformers Should Look Beyond Medicare\u2019s Trust Funds"},"content":{"rendered":"\r\n
On\u00a0March 31, key members of President Biden\u2019s cabinet released Medicare\u2019s annual trustees\u2019\u00a0report<\/a>. It paints a similar picture as past reports: Medicare\u2019s tens of trillions of dollars in unfunded liabilities represent a severe fiscal challenge. But it is important that policy-makers understand just\u00a0how\u00a0severe that challenge is, so that they can undertake the bold, wide-ranging reforms that the crisis calls for.<\/p>\r\n\r\n\r\n\r\n Medicare is financed by two \u201ctrust funds,\u201d though in reality, it is largely funded in a\u00a0pay-as-you-go manner<\/a>. The Hospital Insurance Trust Fund (HI TF) provides payments for Part A\u2019s inpatient hospital and post-acute-care benefits, while the Supplemental Medical Insurance Trust Fund (SMI TF) finances Part B\u2019s physician and outpatient benefits and Part D\u2019s prescription-drug benefits. Payments for Medicare Advantage, or Part C, are also funded out of these accounts.<\/p>\r\n\r\n\r\n\r\n The HI TF\u2019s income comes from payroll taxes. In the past, this tax revenue exceeded spending, which created a positive \u201cbalance\u201d that the Treasury borrowed to fund other federal expenses. But according to the trustees\u2019 report, the HI TF is on track to become insolvent by 2031, when growing expenditures will exhaust the fund\u2019s balances \u2014 which in turn will require a 10 percent reduction in Part A payments, since expenditures cannot exceed revenues.<\/p>\r\n\r\n\r\n\r\n