Strong payroll tax revenue gains and federal government contribution increases helped Medicare turn in strong results for 2024.
The federal health insurance program is reporting $11.2 billion in "net change in assets," or operating profits, on $1.1 trillion in revenue, up from an operating loss of $12.4 billion on $1 trillion in revenue for 2023.
The program ended the year covering 67.6 million people, up 1.3% from the number it was covering a year earlier.
Medicare trustees put the 2024 numbers in their latest annual Medicare program report.
Figures for 2023 are available in a comparable report released in May 2024.
What it means: Medicare had a good year last year.
The trust fund problem: Most Medicare programs use current premium revenue and government contributions to pay for their operations.
One Medicare program, the Medicare Part A inpatient hospitalization program, is supposed to use the earnings on assets stored in a trust fund to cover some costs.
Assets at the trust fund have fallen below $209 billion — less than the asset total at UnitedHealth or CVS Health.
Medicare trustees say they now expect the trust fund to run dry in 2033. That's down from a depletion year of 2036 included in last year's report.
But if the Part A trust fund runs dry, and Congress makes no changes, payroll taxes and premium revenue should be high enough to cover about 89% of the promised inpatient hospitalization benefits, according to the trustees.
The trustees' estimate of the share of promised benefits ongoing revenue can pay is unchanged from last year.
The Medicare backdrop: Medicare is a federal program that provides health coverage for people ages 65 and older, many people with disabilities and many people who have such severe kidney disease that they need dialysis or a kidney transplant.
Congress built the program by adding four different "parts" to Medicare laws.
The Medicare trustees give data in their annual report on the performance of each program part.
Medicare Part A Inpatient Hospitalization Services
Medicare managers use payroll taxes to fund this program, which has 67.2 million enrollees. Some of the payroll taxes are supposed to flow into a trust fund, to smooth out funding needs caused by the baby boom and other population shifts.
In theory, interest earnings on the trust fund could improve program performance, but the program invests solely in federal government bonds that pay a low rate of return, and the balance is rapidly dwindling.
Most Medicare enrollees get Medicare Part A without having to pay any premiums, thanks to the payroll taxes that they, their employers or their spouses have paid.
Many of the enrollees who do pay Medicare Part A premiums are wealthy people without wage income or people with too few years of U.S. work experience to qualify for "free" Part A coverage.
Payroll tax revenue: $396.4 billion (up 8%, from $367.2 billion)
Premium revenue: $5 billion (up 2%, from $4.9 billion)
Assets: $208.8 billion (up 6.2%, from $196.6 billion)
Interest earnings: $7.2 billion (up 26.3%, from $5.7 billion)
Administrative expenses: $6.2 billion (up 10.7%, from $5.6 billion)
TOTAL REVENUE: $451.2 billion (up 8.6%, from $415.3 billion)
TOTAL BENEFITS: $416.3 billion (up 4.7%, from $397.5 billion)
OPERATING RESULTS: $28.7 billion in net gains (up 135%, from $12.2 billion in net gains)
The Part A fund has an actuarial deficit equal to 1.28% of taxable payroll, the trustees estimate.
That compares with a 75-year actuarial deficit of 1.17% of taxable payroll provided last year and a 75-year actuarial deficit of 1.46% provided two years ago.
Medicare Part B Outpatient Hospital Services and Physician Services
This program is funded by federal government contributions and premiums from its 62 million enrollees.
Premium revenue: $140.1 billion (up 6.5%, from $131.5 billion)
Federal government payments: $386 billion (up 12.8%, from $342.1 billion)
Interest earnings: $3.5 (down 14.6%, from $4.1 billion)
Administrative expenses: $5.6 billion (up 3.7%, from $5.4 billion)
TOTAL REVENUE: $532.9 billion (up 10.8%, from $480.9 billion)
TOTAL BENEFITS: $547.8 billion (up 10.1%, from $497.4 billion)
OPERATING RESULTS: $20.5 billion in losses (compared with $22 billion in losses, or a 6.8% lower level of loss)
Medicare Part C plans
This part includes a variety of programs that give private organizations a chance to use federal revenue to provide plans that look to the enrollees like replacements for Original Medicare. The best known is the Medicare Advantage program, whicn has 34.1 million enrollees.
Another is the Program of All-Inclusive Care for the Elderly, a small but growing program that can provide comprehensive, home-based care for people who qualify for both Medicare and Medicaid and who have enough problems with the "activities of daily living" to qualify for Medicaid nursing home benefits.
Government Part A payments: $202.5 billion (up 0.4%, from $201.7 billion)
Government Part B payments: $302.7 billion (up 11.2%, from $272.2 billion)
The Medicare program trustees see the Medicare Part C programs as entities that share in ordinary Medicare Part A and Medicare Part B funding. The trustees don't show how much premium revenue the private plan issuers get from the enrollees or the overall performance of the plans.
Medicare Part D Prescription Drug Plans
Federal government contributions, enrollee premiums and cash from the states fund this program, which has 55.2 million enrollees.
Premium revenue: $19.3 billion (up 3.8%, from $18.6 billion)
Federal contributions: $111.6 billion (up 19.1%, from $93.7 billion)
State contributions: $18 billion (up 13.9%, from $15.8 billion)
Administrative expenses: $500 million (unchanged)
TOTAL REVENUE: $149.3 billion (up 16.3%, from $128.4 billion)
TOTAL BENEFITS: $145.7 billion (up 11.6%, from $130.5 billion)
OPERATING RESULTS: $3.1 billion in gains (up 19.2%, from $2.6 billion in losses)
The Year 2099
The Medicare trustees are already planning for the old age of the children and babies of today.
The latest trustees report includes projections that extend to the year 2099.
Medicare could have 107 million enrollees in 2099, including 106 million with Medicare Part A hospitalization coverage, 101 million with Medicare Part B physician and outpatient services coverage and 91 million with Medicare Part D prescription drug coverage.
Like the 2024 report, the new report also includes projections for 2095.
The trustees' views of what 2095 might be like are evolving.
The projected number of 2095 enrollees has fallen to 107 million. That's 1.4% lower than the 2095 projection published in 2024, and it's 1.8% lower than the 2095 projection published in 2023.
Credit: CMS
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