The Medicare Part A inpatient hospital care insurance program lost $5.8 billion in 2019 on $323 billion in revenue.
That compares with a loss of $1.6 billion on $303 billion in revenue in 2018, according to the new Medicare Trustees Report.
The program’s main source of revenue, payroll taxes, rose 6.3%, to $285 billion, but low interest rates cut interest income and other investment income to $9 billion, from $9.8 billion.
- Medicare Trustees Report documents are available here.
- Social Security Trustees Report documents are available here.
- An article about Medicare and Social Security’s 2018 results is available here.
Benefits payments climbed 6.5%, to $323 billion.
Most Americans qualify for “free” Medicare Part A coverage at retirement, by making payroll tax contributions during their working years, or being married to someone else who’s contributed to the program.
But some Americans, including some immigrants, and never-married people who have not spent much time earning wages, have to pay premiums for Medicare Part A coverage.
Medicare’s voluntary Medicare Part A premium revenue increased 7.5% between 2018 and 2019, to $3.9 billion.
The Medicare Part A Trust Fund Depletion Date
The trustees predict that the trust fund could be depleted in 2026.
If the trust fund were empty, current revenue could cover more than 90% of the Medicare Part A program’s costs in 2026.
Over a 75-year period, however, the program’s actuarial deficit has narrowed to 0.76% of taxable payroll, from 0.91% in the report released a year ago.
The actuarial deficit gap narrowed partly because 2019 costs were lower than expected, and partly because a change in the demographic factors used to calculate future benefits obligations, the trustees say.
The Medicare program also offers the Part B physician and outpatient services program. Managers of the program pay for it with payroll taxes and premiums, rather than with a trust fund.
The trustees of the Social Security retirement income and disability income trust funds have released a similar trustees report for Social Security.
That report shows that Social Security posted a gain of $6.5 billion in 2019 on $919 billion in revenue.
Net payroll tax revenue climbed 12%, to $805 billion, but net interest income fell to $78 billion, from $81 billion.
Scheduled benefits increased to $903 billion, from $845 billion.
Life in 2095
The Social Security trustees try to analyze the solvency of the programs from now through 2095, and they include some detailed projections about what life will be like in 2095.
They assume, for example, that the Medicare and Social Security trust funds will combine for about $2.5 trillion in payroll tax revenue and other non-interest income, when expressed in 2020 dollars.
They also assume that the programs will cover about 178 million to 283 million workers in 2095 and pay Social Security benefits to about 64 million people.
They assume the age-adjusted death rate per 100,000 people age 65 and older will fall to 2,619 in 2095, from about 4,365 this year.
The U.S. Federal Government
Medicare and Social Security are arms of the U.S. federal government.
The U.S. federal government reported a loss of $1 trillion for 2019 on $3.5 trillion in revenue and $21 trillion in gross domestic product, compared with a loss of $779 billion for 2018 on $4.1 trillion in revenue.
— Read Weak Individual Tax Revenue, High Medicare Bills Hit U.S. Government Results, on ThinkAdvisor.