Medicare’s trust fund to run out by 2019? Then what?

BY Paul Solman  April 25, 2008 at 4:14 PM EDT

As senior citizens continue to buy medicine under Medicare, rising costs of Medicare have many taxpayers angry and worried: AP

Question/Comment: Typically the Paul Solman features on the NewsHour are always among the show’s most trenchant and perceptive. That is why I have been hoping that you could do a feature explaining the present financial situation of the Medicare Program.

As I understand the most current Trustees Report, Medicare’s hospital-insurance trust fund (if there even is such a trust fund) will run out of money by 2019, not that far in the future. But sooner than that, in fact by next year, for the first time in history the fund will be paying out more than it takes in.

Was Medicare ever supposed to pay for itself from our Medicare contributions? It is my understanding that the average Medicare recipient receives benefits of approximately $8,500 per year.

Paul Solman: Medicare (see the Online NewsHour’s feature on Medicare) is a looming and ever-growing liability (obligation) of the Federal government. It was never meant to pay for itself, though premiums have risen over the decades. It’s like Social Security – pay-as-you-go – which means that each generation of workers pays for its current retirees. So I’m still paying for folks over 65 and when I hit that number (66, actually), you’ll be paying for me. (Unless you’re older than 65.)

The problem with Medicare, unlike Social Security, is that its costs are much harder to contain – or even predict.