Unbiased Analysis of Today's Healthcare Issues

Statistics from the Medicare Trustees Report

Written By: Jason Shafrin - Jul• 19•11

Basic Statistics
In 2010, 47.5 million people were covered by Medicare: 39.6 million aged 65 and older, and 7.9 million disabled. About 25 percent of beneficiaries have chosen to enroll in Part C private health plans that contract with Medicare to provide Part A and Part B health services. Total benefits paid in 2010 were $516 billion. Income was $486 billion, expenditures were $523 billion, and assets held in special issue U.S. Treasury securities were $344 billion.

Total Medicare expenditures have risen by 9.0 percent per year since 2000. Enrollment growth during that time was only 1.8 percent per year; thus, a per capita growth rate of 7.0 percent is driving overall Medicare growth. For more statistics, see here.

Fiscal Solvency
The financial status of the HI [Hospital Insurance] trust fund was substantially improved by the lower expenditures and additional tax revenues instituted by the Affordable Care Act. However, the HI trust fund is now estimated to be exhausted in 2024, 5 years earlier than was shown in last year’s report, and the fund is not adequately financed over the next 10 years.

Office of the Actuary (OACT) Forecasts
Medicare expenditures represented 3.6 percent of GDP in 2010. Under current law, costs would increase to about 5.6 percent of GDP by 2035 under the intermediate assumptions and to 6.2 percent of GDP by the end of the 75-year period. However, it is important to note that Medicare expenditures are almost certainly understated because of unrealistic substantial reductions in physician payments scheduled under current law and may be further understated (and to a greater degree).

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One Comment

  1. The following refers to the Social Security Trust Fund, but applies equally to all Treasury trust funds. The name “trust fund” has a particular, misleading, political meaning. There are no saleable assets in these “funds”.

    CBO:  What Are Trust Funds?

    The bonds in the Social Security Trust Fund are promises, not assets. They are as good as other government bonds, which are also promises but not assets. The taxing power of the government is in doubt. The promises of the government are so large that all of its bonds may lose some or all of their value, including the bonds in the Social Security and other “funds”. The bonds are a promise, but they don’t help to pay for themselves.

    Don’t take my word for it. Here is a statement by the Congressional Budget Office – May 2003 [edited excerpt]:
    == ==
    The money that the government owes to itself has no impact on the economy because it represents debt owed from one Treasury account to another, mostly held in federal trust funds.

    Trust fund holdings are not assets of the government and do not represent money owed to program recipients individually. Payments to Social Security recipients (like other social insurance programs) are based on rules set by law unrelated to trust fund holdings.

    A federal trust fund is an accounting device that measures the difference between the income designated for a program and the expenditures made to its beneficiaries. The accumulated balance often represents the future “spending authority” for the program, but it is not a reserve of money for making payments.
    == ==

    So, it is just as hard to meet the promises of Social Security as any other promise made by our government. Those promises are backed only by current tax revenue. There are no savings. The amounts represented by the social security trust fund “surplus” were collected and spent long ago. The trust fund bonds are only a note from the government to itself, to find the money somewhere in the future.

    Also, the future promises of Social Security far exceed the notations of the trust fund bonds. Those promises total about $15 trillion (net present value).

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