The Medicare Crises:Real or Imagined

Bruce C. Vladeck, Ph.D.Physicians for a National Health ProgramBoston, MANovember 2, 2013

Other213%

Nondefense Discre-tionary17%

Defense19%

Social Security22%

Medi-care116%

Medicaid7%

Net Interest6%

Chart Title

NOTE: FY is fiscal year. 1Amount for Medicare excludes offsetting premium receipts (premiums paid by beneficiaries, amount paid to providers and later recovered, and state contribution (clawback) payments to Medicare Part D). 2Other category includes other mandatory outlays, offsetting receipts, and negative outlays for Troubled Asset Relief Program (TARP).SOURCE: Congressional Budget Office (CBO) Medicare Baseline, May 2013.

Medicare as a Share of the Federal Budget, 2012

Total Federal Spending, FY2012 = $3.5 TrillionFederal Spending on Medicare, FY2012 = $551 Billion

1990 2000 2010 2020

8.5%

12.1%

15.1%16.9%

SOURCE: CBO Budget and Economic Outlook, January 2011 (for 1990-2010 data) and May 2013 (for 2020 data).

Medicare as a share of Federal Budget Outlays, and as a share of Gross Domestic Product (GDP), 1990-2020

1990 2000 2010 2020

1.9%2.2%

3.6% 3.7%

Medicare Spending as a Share

of Federal Budget Outlays

Medicare Spending as a Share

of Gross Domestic Product (GDP)

Total Federal Outlays (trillions)$1.3 $1.8 $3.5 $5.0

Gross Domestic Product (trillions)$5.7 $9.8 $14.5 $22.9

1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035

20.424.9

28.431.1

34.337.6 39.7

42.647.7

55.6

64.3

73.5

81.586.5

SOURCE: 2013 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds.

Medicare Enrollment, 1970-2035

Historical Projected

In millions:

0

10

20

30

40

50

60

70

80

90

100

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

1.9%

3.0%

2.4%

0.9%

0.4%

39.7

47.7

64.3

81.5

88.9

92.4

SOURCE: 2013 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds.

Projected Change in Medicare Enrollment, 2000-2050

Medicare Enrollment (in millions)

Average Annual Growth in Enrollment

2013

2011

2009

2007

2005

2003

2001

1999

1997

1995

1993

1991

1980

1312

1319

811

1212

1515

232828

2516

104

56

76

1014

1314

2

20262024

20242029

20172019

20192018

20202019

202620302029

20252015

20082001

20012001

20011999

20022005

20031994

1972

NOTES: ‘Insolvency’ refers to the depletion of the trust fund. No insolvency projections were made for 1973-1975 and 1989. For all other years not displayed, the Hospital Insurance Trust Fund was projected to remain solvent for 17 or fewer years.SOURCE: Intermediate projections from 1970-2013 Annual Reports of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds.

Solvency Projections of the Medicare Part A Trust Fund, 1970-2013

Year ofTrustees’Report

Projected Number of Years to Insolvency and Projected Year of Insolvency:

1997 1998 1999 2000 2001 2002 2003 2004 2005 20060%

2%

4%

6%

8%

10%

12%

14%

16%

18%

11.9% 11.8% 12.0%12.8%

14.0%14.9%

15.5% 15.6% 15.6%16.2%

5.5% 5.3% 5.4% 5.5%6.0%

6.5% 6.7% 6.9%7.4%

8.0%

4.1% 4.2% 4.4%4.9% 5.2% 5.5% 5.8% 5.6% 5.5% 5.4%

NOTES: Differences between 1997 and 2006 are statistically significant for all displayed measures. Annual amounts for the components of total health care spending do not sum to total amounts because values shown are median, not mean, values.SOURCE: Kaiser Family Foundation analysis of CMS Medicare Current Beneficiary Survey Cost and Use files, 1997-2006.

Median Out-of-Pocket Health Care Spending As a Percent of Income Among Medicare Beneficiaries, 1997-2006

Total health care out-of-pocket

Premium out-of-pocket

Nonpremium out-of-pocket

$2,049 $2,066

$812 $790

$49 $58 $558 $541

$294 $287

$1,081 $487

LTSSDentalPrescription DrugsPost-AcuteHospital/Medical/SuppliesPremiums

NOTE: LTSS are long-term services and supports and include home health spending. Premiums include Medicare Part A, B, C, and D and private health insurance premiums.SOURCE: Kaiser Family Foundation analysis of CMS Medicare Current Beneficiary Survey 2009 Cost and Use file.

Out-of-Pocket Health Spending by Medicare Beneficiaries 65 and Older, by Gender and Type of Service, 2009

Women Men

Services

$4,844

$4,230

14%7%

29%

20%

21%

22%

12%

15%

23%36% $40,000 or more

$30,000-$40,000

$20,000-$30,000

$10,000-$20,000

Less than $10,000

NOTE: Analysis of Medicare beneficiaries 65 and older.SOURCE: Kaiser Family Foundation analysis of CMS Medicare Current Beneficiary Survey 2009 Cost and Use file.

Income Distribution of Medicare Beneficiaries 65 and Older, by Gender, 2009

Women Men

Income level:

43%

27%

25% had incomes below $14,000

50% had incomes below $22,500

5% had incomes above $88,900

NOTE: Total household income for couples is split equally between husbands and wives to estimate income for married beneficiaries.SOURCE: Urban Institute analysis of DYNASIM for the Kaiser Family Foundation.

Distribution of Medicare Beneficiaries by Income Level, 2012

$532.6 billion $241.7 billion $229.1 billion $61.7 billion

TOTAL Part A Part B Part D4% 6% 3%3%

8%0.0155839279008637

0.13452188006483

13% 2% 25%13%

38%

85%

0.395418700713481

0.721518987341772

0.73419773095624

General revenue

Payroll taxes

Beneficiary premiums

State payments

Taxation of Social Security benefits

Interest and other

NOTE: Numbers may not sum due to rounding. Amounts are fiscal year totals. SOURCE: 2013 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds.

Sources of Medicare Revenue, 2012