Will Medicare Run Out of Money in 2026?

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Medicare trustees announced on Tuesday that the Medicare hospital insurance trust fund will run out of money by 2026, three years earlier than reported in 2017. This is due to:

  • Spending in 2017 that was higher than estimated
  • Legislation that increases hospital spending
  • Higher payments to private Medicare Advantage plans

As for Social Security, it will become insolvent by 2034.

Don’t worry: Medicare won’t stop paying your benefits

Secretary of Health and Human Services Alex Azar said, “The current trajectories in health spending are both unsustainable and unmatched by increases in quality.”

The part of Medicare that the Medicare Trustees report is “going broke” is Part A, which covers hospital stays. Part A makes up a large part of the funds spent under Medicare, around 40% in 2017.

But there’s good news: This does not mean that Medicare will stop paying your benefits. The government could either raise the payroll tax or use general revenue to support Medicare Part A (thus raising the national debt).

Rising numbers of older people

The American aging population is rising quickly. The number of Medicare beneficiaries will be 89 million by 2040, up from 60 million today. The number of people on Social Security will rise to 91 million, up from 62 million today. It is on lawmakers to come up with a way to make Medicare and Social Security work efficiently for the aging population.

Will Medicare run out of money?

The prices of Medicare (and taxes) might go up, but Medicare will not go away. Medicare and Social Security are life-saving programs that reduce poverty and extend the life expectancy of more than 60 million Americans. Medicare and Social Security are financed with payroll taxes, and they make up about 40% of government spending.

Will Medicare run out of money? Funds are low and the aging population is growing. But Americans will still be covered.

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