NCPA - National Center for Policy Analysis

Medicare's Approaching Debacle

May 15, 2002

Experts warn that Medicare's financial plight may exceed that of Social Security. This year's Medicare Trustees' Report predicts bankruptcy for Medicare in 2030. Social Security won't go broke until 11 years later, according to current projections.

But Medicare's demise will leave about 80 million Americans adrift and on their own to finance their health care.

  • Although Medicare is currently running a surplus, that will vanish as demographics shift.
  • Medicare revenues are now 2.6 percent of gross domestic product -- which will grow to 3.7 percent by 2030, and 5.3 percent in 2076.
  • Expenditures are 2.5 percent of GDP now -- and projected to triple to 8.6 percent by 2076.
  • The worker-to-recipient ratio is falling -- and will go from more than 3-1 now to 2-1 by 2026.

Achieving financial stability requires adopting some ultra-painful political options -- raising taxes, lowering benefits, cutting budgets or adopting deficit spending.

Source: Sean Higgins, "Medicare's Pending Collapse Could Dwarf Social Security," Investor's Business Daily, May 14, 2002.

 

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