The 2021 Medicare Trust Fund Report by The Numbers

By Clive Riddle, September 2, 2021

What is the state of the Medicare Trust Fund, by the numbers? $900 billion in income and $926 billion in  expenditures provided for the 62.6 million Medicare beneficiaries, with the Part A fund projected to be depleted in 2026, and current running at 4.0% of GDP that will increase to 6.5% before the end of this century.

Earlier this week, the 255-page 2021 Medicare Trust Fund report was released, which of course found that  in 2026  for Medicare Part A, “the fund's reserves will become depleted and continuing total program income will be sufficient to pay 91 percent of total scheduled benefits.”

The supplemental trust fund accounts - Part B and Part D, are "adequately financed into the indefinite future because current law provides financing from general revenues and beneficiary premiums each year to meet the next year's expected costs. Due to these funding provisions and the rapid growth of its costs, SMI will place steadily increasing demands on both taxpayers and beneficiaries."

The fund projections "have been significantly affected by the pandemic and the recession of 2020. Employment, earnings, interest rates, and GDP dropped substantially in the second calendar quarter of 2020 and are assumed to rise gradually thereafter toward full recovery by 2023, with the level of worker productivity and thus GDP assumed to be permanently lowered by 1 percent even as they are projected to resume their pre-pandemic trajectories. In addition, the Trustees also project elevated mortality rates related to the pandemic through 2023 (15 percent for those over age 15 in 2021, declining to 1 percent by 2023) as well as reductions in immigration and childbearing in 2021-22 from the levels projected in the 2020 reports, with compensating increases a few years later."

The report projects that for total Medicare expenditures as a percentage of GDP will increase from 4.0 percent in 2020 to 6.5 percent by 2095.” Here’s a graph of Medicare percent of GDP provided in the report, historical and projected, for this century:

Setting aside fund projections for now, perhaps the item of more immediate interest in the report is the Medicare fund snapshot for the year just completed, providing a view of the $900 billion total fund income, and $926 billion total fund expenditures for 2020, provided for the 62.6 million Medicare beneficiaries:

We compiled the fund benefits for 2020 and 2019, excluding Part C (Medicare Advantage, etc) to provide a comparison of percentage of benefit expenditures by category before (2019) and during (2020) the pandemic. The big change is in the “Other” category, which as the report footnotes “Includes the impact of the Accelerated and Advance Payments Program, which was significantly expanded during 2020 due to the COVID-19 pandemic. Total payments of $107.1 billion were made from the HI trust fund and the SMI Part B trust fund account.” Thus the $99.9 billion increase in “Other” from 2019 to 2020 is explained by these pandemic program payments.