Democrats and Republicans are accusing one another of trying to “cut” Medicare .
The finger-pointing obscures the reality that both parties will eventually have to make cuts to the program. It’s a matter of arithmetic. The country has fewer and fewer workers available to fund the healthcare of more and more seniors.
Seniors made up only 10% of America’s population in 1965, when President Lyndon Johnson signed Medicare into law. Today, nearly 1 in 5 people qualify for the program. By 2060, the number of seniors in America will have grown from 54 million to almost 95 million. And the U.S. birth rate has dropped from around 20 people per 1,000 in 1965 to 12 per 1,000 today. Medicare accounted for 13% of federal spending in 2022, net of offsetting receipts from beneficiaries’ premiums and the like, according to the Peter G. Peterson Foundation . In 1972, by comparison, it was 3% of federal spending.
Absent action, the program’s part A hospital insurance trust fund will be exhausted in 2028 . At that point, Medicare may not be able to pay hospitals on time — or may unilaterally cut payments to levels that reflect what the fund is taking in taxes. Either way, the financial future of hospitals would be threatened — as would Medicare beneficiaries’ ability to access care.