However, the Medicare hospital insurance program will not run out of all financial resources and will stop working after 2036, like the “bankruptcy”. When talking about the financial situation of Medicare, attention is often focused on a specific measure: the solvency of the Medicare Hospital Insurance (HI) trust fund, which pays for Medicare Part A benefits. Based on the current projections of the Medicare Board of Directors in its 2024 report, the Hawaii trust fund is expected to run out in 2036, 12 years from now, representing a five-year improvement compared to the expected depletion date of 2031 in the previous report due to the increase in expected revenues and the reduction in projected spending. Social Security and Medicare are expected to reduce monthly benefits in less than a decade, as trust funds for both programs are on track to run out sooner than previously expected. While current projections show that the Medicare HI trust fund's short-term solvency prospects have improved, the Medicare program continues to face long-term financial pressures associated with rising health care costs and an aging population.
Medicare Part B and D income is determined annually to meet expected spending obligations for the following year, meaning that the SMI trust fund is not facing a funding shortfall, unlike the HI trust fund. Medicare, the federal health insurance program for 67 million people age 65 and older and younger people with long-term disabilities, helps pay for hospital and doctor visits, prescription drugs, and other acute and post-acute care services. The date 2031 refers to the Medicare Part A trust fund, which pays for hospital visits, nursing home care, palliative care and some home health care visits. However, the increase in projected expenditures for benefits covered by Part B and Part D will increase the amount of general income and beneficiary premiums needed to cover the costs of these parts of the Medicare program in the future.
Once the fund's reserves run out, Medicare will only be able to cover 89% of the costs of hospital visits, palliative care and nursing home stays or home health care for patients after hospital visits. Evaluating these changes is likely to involve careful deliberation about the effects on federal spending, Medicare program finances, and beneficiaries, healthcare providers and taxpayers. The distribution of Medicare funding changes largely because trustees project that the costs of Part B and especially Part D are increasing at a faster rate than those of Part A.Last year's expenses for the Medicare hospital insurance trust fund were also higher than originally expected, according to the report, contributing to a delay in the program's bankruptcy date. Part D also receives payments from states that reflect the estimated amounts they would have paid for prescription drug costs for people who qualify for both Medicare and Medicaid if Medicaid had remained the primary payer.
The hospital insurance trust fund pays for Medicare Part A, which covers care provided in hospitals and skilled nursing facilities, as well as some home care. This is mainly due to a change in policy regarding the way in which Medicare Advantage rates are counted and because expenses for inpatient hospital services and home health agencies are lower than expected.
