Excerpt: Question 10
Medicare’s Drift Toward Insolvency

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By 2026, Medicare is unlikely to be able to pay all of its hospital and nursing home bills.

Ask the Candidate:

How would you restore the long-term solvency of Medicare’s hospital insurance program?

Congress recently added a prescription drug program to Medicare that is now estimated to cost taxpayers at least $540 billion over the next 10 years and possibly twice as much during the following decade. Yet Congress refuses to prescribe a cure for Medicare’s Hospital Insurance Trust, which receives all of our Medicare taxes and pays for hospital and nursing home costs of seniors (Medicare “Part A”).1 By the year 2026, the assets of the trust are likely to be exhausted, according to the trustees’ most recent report. After that, monthly Medicare taxes will be sufficient to pay only 73% of benefits, and even less over time.

The trustees’ report should set off alarms all over Capitol Hill. The trustees include the secretary of the treasury, the secretary of labor, the secretary of health and human services, and the administrator of the Centers for Medicare and Medicaid Services, hardly alarmist types. Just listen to the chilling alternatives they enumerated that would make the hospital insurance program financially sound: add nearly $6 trillion to the trust, now; or increase the Medicare payroll tax from 2.9% of wages to 5.3%, now; or cut Medicare benefits by 42%, now.2

We’ve known the demographics for years: The number of Medicare beneficiaries will rise rapidly once baby boomers begin to retire, and the number of workers compared to the number of seniors will continue to diminish. We also know that seniors are living longer and longer and that every year they consume an increasing amount of medical care, all of which will drive up medical costs.