Bad news for Medicare

We hear a lot about the date at which the Medicare trust fund is projected to deplete (in the latest report, around 2030). But there’s another side of things. As Dr. Charles Blahous points out, “This fund represents but one part of Medicare, and less than half of program spending at that ($266 billion in 2013).”

And as Blahous points out, focusing too much on the trust fund aspect, in which Medicare does slightly better than Social Security, overlooks the fact that Medicare arguably “poses the greater challenge” when it comes to the overall budget. The 2014 trustees report reveals the unsettling fiscal reality of Medicare:

Its costs are rising faster than Social Security’s and will put greater pressure on the overall federal budget in the years ahead. Total Medicare costs are 3.4 percent of GDP today but are projected to rise rapidly to 5.4 percent of GDP by 2035, and 6.9 percent by 2088.

America’s entitlement system is badly broken. We can focus all we want on consequences down the road, but the fact is that these massive spending drivers are poised to do major damage very soon — and likely won’t survive for future generations unless leaders on both sides are willing to make the tough choices now instead of kicking the can down the road.