The Health Policy Series
The A, B, C’s of Medicare
Joseph Antos
Wilson H. Taylor Scholar in Heath Care and Retirement Policy
American Enterprise Institute
September 12, 2011
Medicare Sources of Revenue, 2010
HI Trust Fund
Premiums 3.3 2.7 Other
Interest 13.8
Benefit tax
13.8
Payroll tax
182.0
SMI Trust Fund
State transfers
4.0 3.1
0.2 Other
Interest
58.4
Premiums
General Revenue
204.6
Estimated Sources of Medicare Revenue, 2010
General Revenue
43%
Payroll Taxes
74%
82%
85%
Payments from
States
37%
13%
3% 1%
4%
TOTAL
$499 billion
Beneficiary
Premiums
Taxation of Social
Security Benefits
6%
7%
1%
PART A
$218 billion
25%
10%
1%
PART B
$219 billion
7%
PART D
$63 billion
SOURCE: 2010 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary
Medical Insurance Trust Funds; display from the Kaiser Family Foundation, Medicare chart book.
Interest and
Other
Medicare Spending by Service, 2010
Total Spending
MA
Inpatient Hospital
$115
$138
Other
$60
Physician
$63
Hosp. Outpat.
$27 HH, SNF
$46
$59
Part D
Total Medicare Benefit Payments = $510 billion
Fee-For-Service
Other
15%
Hospital
Outpatient
Inpatient
Hospital
7%
35%
Home Health, SNF
12%
Part D
15%
Physician
16%
Total FFS Benefit Payments = $395 billion
Medicare Supplements, 2007
None
Other
11%
1%
Retiree
41%
16%
Medicaid
Medigap
32%
Among FFS Enrollees
In addition, 25% of beneficiaries are enrolled in Medicare Advantage
Medicare Trust Fund Facts (2011 Trustees Report)
Spending > income
Trust fund exhausted
Unfunded obligations through 2085
Unfunded obligations, infinite horizon
HI
2008
2024
SMI
Never
Never
$3.0 trillion
-$0.1 trillion
$20.4 trillion
$38.5 trillion
100
4
3.3
Enrollment (millions)
2.8
75
92.7
3
80.4
63.5
50
2.3
2.2
2.2
2
47.4
25
1
0
0
2010
2020
2030
2040
2050
Workers per Beneficiary
88.3
Medicare Spending and Income as Percentage of GDP
Medicare’s Contribution to Our Fiscal Crisis
Growth in Spending, 2007-2035
CBO Alternative Fiscal Scenario
60.0%
50.3%
50.0%
40.0%
30.0%
25.2%
20.0%
16.1%
13.3%
10.0%
-4.9%
0.0%
Medicare
-10.0%
Medicaid, Social Security
Exchanges
Other
600.0%
520.0%
500.0%
400.0%
300.0%
200.0%
100.0%
100.0%
0.0%
Total Spending
Debt
Interest