Editing Medicare (United States) (section)

==Costs and funding challenges==
[[File:Medicare Parts A B C D.png|upright=2.0|thumb|Medicare spending as a percent of GDP]]
[[File:Medicare Revenue-Expenses.png|upright=2.75|thumb|Medicare expenses and revenue]]

Over the long-term, Medicare faces significant financial challenges because of rising overall health care costs, increasing enrollment as the population ages, and a decreasing ratio of workers to enrollees. Total Medicare spending was projected to increase from $523 billion in 2010 to around $900 billion by 2020. From 2010 to 2030, Medicare enrollment is projected to increase, from 47 million to 79 million, and the ratio of workers to enrollees is expected to decrease from 3.7 to 2.4.<ref>{{cite web |url=https://www.cms.gov/ReportsTrustFunds/downloads/tr2010.pdf |title=Trust funds |date=2010 |website=Cms.gov |access-date=2019-06-14}}</ref> However, the ratio of workers to retirees has declined steadily for decades, and social insurance systems have remained sustainable due to rising worker productivity. There is some evidence that [[productivity]] gains will continue to offset demographic trends in the near future.<ref>{{cite web |title=Medicare Chartbook, 2010 |date=October 30, 2010 |url=http://kff.org/medicare/report/medicare-chartbook-2010/|work=[[Kaiser Family Foundation]]|access-date=October 20, 2013 |archive-url=https://web.archive.org/web/20131005115529/http://kff.org/medicare/report/medicare-chartbook-2010/|archive-date=October 5, 2013 |url-status=live}}</ref>

The [[Congressional Budget Office]] (CBO) wrote in 2008 that "future growth in spending per beneficiary for Medicare and Medicaid—the federal government's major health care programs—will be the most important determinant of long-term trends in federal spending. Changing those programs in ways that reduce the growth of costs—which will be difficult, in part because of the complexity of health policy choices—is ultimately the nation's central long-term challenge in setting federal fiscal policy."<ref>[http://www.cbo.gov/ftpdocs/93xx/doc9385/06-17-LTBO_Testimony.pdf CBO | The Long-Term Budget Outlook and Options for Slowing the Growth of Health Care Costs] {{Webarchive|url=https://web.archive.org/web/20111203123408/http://www.cbo.gov/ftpdocs/93xx/doc9385/06-17-LTBO_Testimony.pdf |date=December 3, 2011 }}. Cbo.gov (June 17, 2008). Retrieved on July 17, 2013.</ref>

Overall health care costs were projected in 2011 to increase by 5.8 percent annually from 2010 to 2020, in part because of increased use of medical services, higher prices for services, and new technologies.<ref>{{Cite journal|last=Fleming|first=Chris |title=U.S. Health Spending Projected To Grow 5.8 Percent Annually |url=https://www.healthaffairs.org/do/10.1377/forefront.20110728.012690/full/|journal=Health Affairs Forefront|year=2011|language=en |doi=10.1377/forefront.20110728.012690}}</ref> Health care costs are rising faster than inflation across the board, but the cost of insurance has risen dramatically for families and employers as well as the federal government. Since 1970, the per-capita cost of private insurance coverage has grown roughly one percentage point faster each year than the per-capita cost of Medicare. Since the late 1990s, Medicare has performed especially well relative to private insurers.<ref>{{cite web |title=NHE Web Tables for Selected Calendar Years 1960–2010 |publisher=Center of Medicare and Medicaid Services |url=https://www.cms.gov/NationalHealthExpendData/downloads/tables.pdf |access-date=February 16, 2012 |url-status=dead |archive-url=https://web.archive.org/web/20120127170317/http://www.cms.gov/NationalHealthExpendData/downloads/tables.pdf |archive-date=January 27, 2012 |at=(table needed)}}{{pn|date=January 2025}}</ref> Over the next decade, Medicare's per capita spending is projected to grow at a rate of 2.5 percent each year, compared to private insurance's 4.8 percent.<ref name="cms.gov">{{cite web |url=https://www.cms.gov/NationalHealthExpendData/downloads/proj2010.pdf |title=National Health Expenditure Projections 2010–2020 |access-date=February 16, 2012 |url-status=dead |archive-url=https://web.archive.org/web/20120309123319/https://www.cms.gov/NationalHealthExpendData/downloads/proj2010.pdf |archive-date=March 9, 2012 }}</ref> Nonetheless, most experts and policymakers agree containing health care costs is essential to the nation's fiscal outlook. Much of the debate over the future of Medicare revolves around whether per capita costs should be reduced by limiting payments to providers or by shifting more costs to Medicare enrollees.

===Indicators===
Several measures serve as indicators of the long-term financial status of Medicare. These include total Medicare spending as a share of [[gross domestic product]] (GDP), the solvency of the Medicare HI trust fund, Medicare per-capita spending growth relative to [[inflation]] and per-capita GDP growth; general fund revenue as a share of total Medicare spending; and actuarial estimates of unfunded liability over the 75-year timeframe and the infinite horizon (netting expected premium/tax revenue against expected costs). The major issue these indicators is comparing any future projections against current law vs. what actuaries expect to happen. For example, current law specifies that Part A payments to hospitals and skilled nursing facilities will be cut substantially after 2028 and that doctors will get no raises after 2025. Actuaries expect that the law will change to keep these events from happening.

===Total Medicare spending as a share of GDP===
[[File:Effects of Population Aging and Excess Health Care Costs on Entitlement Programs (2013).png|thumb|upright=2.0|Medicare and Medicaid Spending as % GDP (2013)]]
[[File:Medicare Cost and Non-Interest Income by Source as a Percentage of GDP.png|thumb|upright=2.0|Medicare cost and non-interest income by source as a percentage of GDP]]
This measure, which examines Medicare spending in the context of the US economy as a whole, is projected to increase from 3.7 percent in 2017 to 6.2 percent by 2092<ref name="cms.gov"/> under current law and over 9 percent under what actuaries really expect will happen (called an "illustrative example" in recent-year Trustees Reports).

===The solvency of the Medicare HI trust fund===
This measure involves only Medicare Part A. The trust fund is considered insolvent when available revenue plus any existing balances will not cover 100 percent of annual projected costs. According to the 2018 estimate by the Medicare trustees, the trust fund was expected to become insolvent in 8 years (2026), at which time available revenue will cover around 85 percent of annual projected costs for Part A services.<ref name="ReferenceB">{{cite web|url=https://www.cms.gov/ReportsTrustFunds/downloads/tr2016.pdf |title=2016 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds |date=2016 |website=Cms.gov |access-date=2019-06-14}}</ref> Since Medicare began, this solvency projection has ranged from two to 28 years, with an average of 11.3 years.<ref>{{cite web |url=https://fas.org/sgp/crs/misc/RS20946.pdf |title=Medicare: Insolvency Projections |at=Graph on Page 4 |date=October 25, 2021 |access-date=August 30, 2013}}</ref> This and other projections in Medicare Trustees reports are based on what its actuaries call the intermediate scenario but the reports also include worst-case and best-case projections that are quite different (other scenarios presume Congress will change present law).

===Medicare per-capita spending growth relative to inflation and per-capita GDP growth===
Per capita spending relative to inflation per-capita GDP growth was to be an important factor used by the PPACA-specified [[Independent Payment Advisory Board]] (IPAB), as a measure to determine whether it must recommend to Congress proposals to reduce Medicare costs. However, the IPAB never formed and was formally repealed by the Balanced Budget Act of 2018.

===General fund revenue as a share of total Medicare spending===
This measure, established under the [[Medicare Modernization Act]] (MMA), examines Medicare spending in the context of the federal budget. Each year, MMA requires the Medicare trustees to make a determination about whether general fund revenue is projected to exceed 45 percent of total program spending within a seven-year period. If the Medicare trustees make this determination in two consecutive years, a "funding warning" is issued. In response, the president must submit cost-saving legislation to Congress, which must consider this legislation on an expedited basis. This threshold was reached and a warning issued every year between 2006 and 2013 but it has not been reached since that time and was not expected to be reached in the 2016–2022 "window". This is a reflection of the reduced spending growth mandated by the ACA according to the Trustees.

===Unfunded obligation===
Medicare's unfunded obligation is the total amount of money that would have to be set aside today such that the principal and interest would cover the gap between projected revenues (mostly Part B premiums and Part A payroll taxes to be paid over the timeframe under current law) and spending over a given timeframe. By law the timeframe used is 75 years though the Medicare actuaries also give an infinite-horizon estimate because life expectancy consistently increases and other economic factors underlying the estimates change.

As of January 1, 2016, Medicare's unfunded obligation over the 75-year time frame is $3.8 trillion for the Part A Trust Fund and $28.6 trillion for Part B. Over an infinite timeframe, the combined unfunded liability for both programs combined is over $50 trillion, with the difference primarily in the Part B estimate.<ref name="ReferenceB"/> These estimates assume that CMS will pay full benefits as currently specified over those periods though that would be contrary to current United States law. In addition, as discussed throughout each annual Trustees' report, "the Medicare projections shown could be substantially understated as a result of other potentially unsustainable elements of current law."{{Citation needed|date=March 2025}} For example, current law effectively provides no raises for doctors after 2025; that is unlikely to happen. It is impossible for actuaries to estimate unfunded liability other than assuming current law is followed (except relative to benefits as noted), the Trustees state "that actual long-range present values for (Part A) expenditures and (Part B/D) expenditures and revenues could exceed the amounts estimated by a substantial margin."{{Citation needed|date=March 2025}}

===Public opinion===
Popular opinion surveys show that the public views Medicare's problems as serious, but not as urgent as other concerns. In January 2006, the [[Pew Research Center]] found 62 percent of the public said addressing Medicare's financial problems should be a high priority for the government, but that still put it behind other priorities.<ref>{{cite web |url=http://www.publicagenda.org/citizen/issueguides/medicare/publicview/people-concerns |title=Medicare: People's Chief Concerns |publisher=[[Public Agenda]] |access-date=July 25, 2008 |archive-url=https://web.archive.org/web/20080919171331/http://www.publicagenda.org/citizen/issueguides/medicare/publicview/people-concerns |archive-date=September 19, 2008 |url-status=dead }}</ref> Surveys suggest that there is no public consensus behind any specific strategy to keep the program solvent.<ref>{{cite web |url=http://www.publicagenda.org/blogs/paying-for-quality-over-quantity-in-health-care-why-the-public-ought-to-be-engaged |title=Paying for Quality over Quantity in Health Care |publisher=[[Public Agenda]] |access-date=December 1, 2015 |archive-url=https://web.archive.org/web/20151208123334/http://www.publicagenda.org/blogs/paying-for-quality-over-quantity-in-health-care-why-the-public-ought-to-be-engaged |archive-date=December 8, 2015 |url-status=dead }}</ref>

===Fraud and waste===
{{Main|Medicare fraud}}
The [[Government Accountability Office]] lists Medicare as a "high-risk" government program in need of reform, in part because of its vulnerability to fraud and partly because of its long-term financial problems.<ref>{{cite web|url=http://www.cms.hhs.gov/ReportsTrustFunds/downloads/tr2006.pdf|title="High-Risk Series: An Update" U.S. Government Accountability Office, January 2003 (PDF) | access-date=July 21, 2006}}</ref><ref>{{Cite journal |url=http://www.gao.gov/docdblite/summary.php?rptno=GAO-05-656&accno=A37738 |title=U.S. GAO – Report Abstract |issue=GAO-05-656 |website=Gao.gov |access-date=February 19, 2011 |date=October 12, 2005 |archive-url=https://web.archive.org/web/20080623073055/http://www.gao.gov/docdblite/summary.php?rptno=GAO-05-656&accno=A37738 |archive-date=June 23, 2008 |url-status=dead }}</ref><ref>[http://www.gao.gov/new.items/d02546.pdf Medicare Fraud and Abuse: DOJ Continues to Promote Compliance with False Claims Act Guidance] {{Webarchive|url=https://web.archive.org/web/20060824201401/http://www.gao.gov/new.items/d02546.pdf |date=August 24, 2006 }}, GAO Report to Congressional Committees, April 2002</ref> Fewer than 5% of Medicare claims are audited.<ref name="washingtonpost.com">{{Cite news|last=Johnson|first=Carrie|date=2008-06-13|title=Medical Fraud a Growing Problem|newspaper=[[The Washington Post]] |language=en-US|url=http://www.washingtonpost.com/wp-dyn/content/article/2008/06/12/AR2008061203915.html|access-date=2023-01-06|issn=0190-8286}}</ref>