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Health Policy
January 26, 2021

Addressing the Risk of Medicare Trust Fund Insolvency

Author Affiliations
  • 1Harvard Medical School, Boston, Massachusetts
  • 2Kaiser Family Foundation, San Francisco, California
JAMA. 2021;325(4):341-342. doi:10.1001/jama.2020.26026

Medicare solvency is among the many time-sensitive health care challenges awaiting action by the Biden administration and Congress. The Congressional Budget Office (CBO) projects1 that the Medicare Hospital Insurance (HI) Trust Fund, which pays for hospital, nursing facility, home health, and hospice services provided under traditional Medicare and Medicare Advantage plans, will become insolvent in 2024. This date is 2 years sooner than predicted by the Medicare trustees before accounting for the effects of the coronavirus disease 2019 (COVID-19) pandemic. The Medicare HI Trust Fund is funded mainly by payroll taxes and taxation of Social Security benefits. The CBO projects that the trust fund’s obligations will outpace revenues by 1% per year over the next decade, resulting in a 10-year deficit of $758 billion. Without an increase in funds, Medicare will be unable to fulfill its obligations to more than 68 million individuals and will only able to pay 83% of bills for hospital, nursing home, and home health care covered under Part A in 2024. Congress has addressed insolvency in the past but never on such a tight deadline.

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