By: Paul N. Van de Water

Published: April, 2007

Medicare Brief No. 17 ~ April 2007
Summary: Each year Medicare’s Board of Trustees issues a report that describes the financial condition of the Medicare program in the near term and over the next 75 years. Similar to recent trustees reports, the 2007 report projects that Medicare’s Hospital Insurance Trust Fund will be depleted in 2019, at which time scheduled income will cover 79 percent of expenditures. For the first time, the trustees have issued a “Medicare funding warning,” which means that more than 45 percent of Medicare will be financed by general (non-dedicated) revenues within the next seven years.

Looking at these projections, some observers contend that Medicare must be fundamentally restructured in order to put the program—and the overall federal budget—on a sound fiscal course. Others point out that Medicare spending has grown at about the same rate as spending for private health insurance and argue that it is impossible to limit spending on Medicare without also slowing the growth of private health care costs or abandoning equal access to care for the aged and disabled.

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