There's an inconvenient truth underneath the politics of Medicare — its finances are simply unsustainable.
Why it matters: Medicare is one of the largest line items in the U.S. budget, and as the population ages, it's expected to only get more expensive.
By the numbers: Medicare spending is expected to more than double by 2033 — climbing to $1.6 trillion, or over 4% of the entire U.S. economy, according to an estimate released yesterday by the Congressional Budget Office.
- And the program's trustees have said the fund that pays for Medicare's hospital coverage will soon reach a dangerous tipping point — paying out more than it takes in. On that trajectory, it eventually wouldn't be able to pay for the coverage it's supposed to provide.
Reality check: Lawmakers really only have three options to stop that from happening: raise taxes, cut benefits, or cut payments to the health care industry.
- Republicans are against tax increases on principle, and have gotten a lot of political mileage out of attacking them.
- Democrats are against benefit cuts on principle, and have gotten a lot of political mileage out of attacking them.
- And although some Republicans are hinting that they might be open to reducing payments to doctors, hospitals, insurers or pharma companies, the party's campaign apparatus is currently hammering the Biden administration for proposals to do exactly that.
The bottom line: Without intervention, Medicare's financial problems will come to a head soon enough. And then it'll be everyone's problem.
