This week on the podcast, we consider the most urgent retirement-related issue facing the new Biden administration and Congress: Medicare’s solvency problem.
The problem has to do with just one part of Medicare – Part A. That’s the Hospital Insurance Trust Fund, which pays for hospital bills. Unlike other parts of Medicare, Part A is funded mainly through the Medicare payroll tax; parts B and D are financed through a combination of general government revenue and premiums paid by beneficiaries.
The Medicare trustees projected last year that Part A will become insolvent in 2024 — less than three years from now. Just last week, the Congressional Budget Office forecast a somewhat longer insolvency date due to an improving economic outlook – 2026. But we’ll have to wait to see what the Medicare trustees have to say a bit later this year – they don’t always agree with the CBO projections.
Joining me on the podcast to talk about Medicare solvency is Dr. Gretchen Jacobson. Gretchen is vice president for Medicare at The Commonwealth Fund, a foundation that focuses on health care. She’s a top expert on Medicare, holding a Ph.D. in health economics, and having also worked for a number of years on Medicare policy at the Kaiser Family Foundation before joining Commonwealth.
Commonwealth recently published a really interesting series of blog posts by Medicare experts outlining proposals to solve the Part A problem, which I recommend. For this conversation, I asked Gretchen to walk us through all the options for fixing Medicare’s finances.
And a note for listeners: I taped this interview before the CBO projection was issued – so the context of our conversation is a 2024 insolvency date.