Medicare Part A Hospital Insurance Trust Fund is already running a cash deficit

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From: The Concord Coalition

WASHINGTON BUDGET REPORT: May 18, 2009

Trustees Report Shows Medical Hospital Fund Already in the Red

Medicare is a national health insurance entitlement program for Americans 65 and older. The program also covers workers who have become disabled. The program has four parts:

• Part A Hospital Insurance, financed primarily by current workers' payroll taxes (1.45% payed by current employers and employees), covers hospital services, post-hospital services, and hospice care.
• 
  Part B Supplementary Medical Insurance, financed primarily by general tax revenues (as well as premiums and copayments), provides optional coverage for physician services, outpatient hospital care, home health care and medical equipment.
• 
  Part C "Medicare Advantage" provides managed care options for beneficiaries enrolled in Parts A and B.
• 
  Part D Prescription Drug Coverage, financed by general tax revenues and premiums, provides optional drug coverage for the elderly and disabled.

HI Trust Fund already running a cash deficit.--The 2009 Trustees Report found that Medicare's Hospital Insurance Trust Fund already paid out more in benefits last year, than it received in cash income.

Moreover, cash deficits will continue to grow due to the rapid increase in health care costs and the retirement of the baby boom generation.

Part A Trust Fund Income in 2008*: $215 billion. Outgo during 2008: $236 billion.

SMI Trust Fund: Medicare Part B and Part D comprise the Supplementary Medical Insurance (SMI) Trust Fund. However, since general revenues are automatically pumped into this "trust fund" to cover expenditures not paid for by premiums and copayments, it is not a trust fund in any meaningful sense. This stands in contrast to the HI Trust Fund, which is financed by a dedicated revenue source (primarily payroll taxes).

*(Excluding interest from the Treasury, which is simply an intragovernmental transfer)

2009 Medicare Trustees Report


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