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Medicare's Fiscal Future

Medicare’s finances are handled through two trust funds, the Hospital Insurance (HI, or Medicare Part A) Trust Fund and the Supplementary Medical Insurance (SMI) Trust Fund.

According to current projections, the Hospital Insurance Trust Fund will receive income of $215.6 billion in 2010 and pay out $247.9 billion in benefits and administrative expenses, leaving a deficit of $32.3 billion for the year. At the end of the year, the HI Trust Fund will hold $271.9 billion in assets. Current income and trust fund reserves will be sufficient to pay hospital insurance benefits through 2024, when the reserves are projected to be depleted. At that point, if no changes are made, scheduled HI income will cover 90 percent of estimated expenditures.

The Supplementary Medical Insurance Trust Fund is always adequately financed because beneficiary premiums and general revenue contribution are set annually to cover the expected costs of Parts B and D of Medicare for the coming year. However, the rapid rate of growth in program costs will place increasing demands on both beneficiaries (to pay the premiums) and taxpayers (to provide the general revenues).

Medicare’s spending is growing rapidly for the same reasons that private health spending is growing rapidly—higher prices, new medical technology and an aging population.

For more information, see:

The official Medicare website is www.medicare.gov.