Medicare Gets a New Warning About Coverage

Medicare recipients got a brutal warning this week as the Centers for Medicaid and Medicare Services appear to only be able to fully cover seniors for roughly the next decade.

The money in the Medicare program is likely to run out within 10 years if nothing changes, and the government would then only be able to provide 89 percent of health care coverage, according to the Treasury Department’s Social Security and Medicare Trustees Report.

Specifically, by 2036, health care revenues are predicted to only cover 89 percent of estimated expenditures, dropping down to just 87 percent in 2048.

“Today’s Trustees reports drive home the fact that the clock is ticking down on automatic cuts to Social Security and Medicare,” Michael Peterson, CEO of the Peter G. Peterson Foundation, said in a statement. “It’s actually harmful to promise not to touch these essential programs, because failing to act will mean significant, immediate cuts that affect millions of Americans.”

The state of Medicare’s funding has triggered a warning in the most recent Board of Trustees report.

In 2027, the government predicts the difference between the program’s costs and revenues is going to be greater than 45 percent, meaning the president will need to submit a proposal to Congress shortly after submitting the 2026 fiscal year budget. Congress will then need to vote on measures to help fix the program in a rapid manner as the countdown is on.

“We are committed to steps that would protect and strengthen these programs that Americans rely on for a secure retirement,” Treasury Secretary Janet Yellen said in a statement.

Social Security, another social safety net program, is also facing a crisis as it’s anticipated to run out of money for full payments by 2035. Starting then, only about 83 percent of benefits could be sent out to Americans, who have been paying into the system since they joined the workforce.

Both Medicare and Social Security are in their current state due to the increasing number of Baby Boomers retiring. At the same time, the current number of younger Americans entering the workforce and paying taxes does not keep up with the financial needs of the older generation.

As both programs near insolvency, the issue has taken center stage for the national election. President Joe Biden has said former President Donald Trump plans to make significant cuts to both plans. Trump, meanwhile, has said that’s a solution he was open to when looking at the looming funding crisis.

Biden, on the other hand, said he would keep Medicare and Social Security safe from any cuts and suggested boosting taxes on those who earn more than $400,000 to save the programs from running out of money.

“If anyone wants to cut Social Security and Medicare or raise the retirement age again, I will stop them,” Biden said during his March State of the Union speech.

Earlier in the year, the House Republican Study Committee proposed increasing the retirement age and lowering benefits in order to keep Social Security funding intact.

Some other proposals center around bringing the payroll tax rate up by 3.33 percent or lowering benefits by 21 percent.

Americans are largely in favor of keeping the benefits and qualification criteria the same for both Medicare and Social Security, however.

In a recent eHealth survey, 74 percent of 3,500 Medicare beneficiaries said they’re worried about the program’s sustainability. Yet, at the same time, 97 percent said they don’t want to see any changes in the program that would affect them.

“This is one of the most financially concerning factors for many Americans in the coming years,” Alex Beene, a financial literacy instructor at the University of Tennessee at Martin, told Newsweek. “The amount of funding Medicare is expected to have is just not keeping up with rising expenses in the health care space. As a result, we’re only a few years away from a probable inability to fully cover the costs needed for everyone in the program, and while the alarm is being sounded, few are listening.”

On both ends of the political spectrum, lawmakers are campaigning to “protect and preserve” Medicare, Beene said, but few are actually looking at solutions to fill the gap in the funding.

“As more Americans enter the qualifying age and want to make use of the program, more demand will be put on it,” Beene said, adding the situation will only become more intense as health care prices invariably rise with inflation.

“It’s the perfect storm of problems for government funding, and some hard choices are going to have to be made,” Beene said. “Whether it comes in the form of additional taxes, pulling funding from other sources, or just the printing of more money to cover the difference, something will have to be done to keep Medicare a successful program. Too many rely on it.”