Perspectives on Medicare’s Future Finances

The brief’s key findings are:

• Headlines that focus on the exhaustion of Medicare’s Hospital Insurance trust fund miss the big picture.
• The real problem is that Medicare, overall, costs a lot.  And, if constraints on its payments to hospitals and doctors are eased, it will cost even more.
• One reason is that Medicare operates within the very expensive U.S. healthcare system, which costs twice as much as those in other countries.
• Another reason is Medicare Advantage plans, which now cover more than half of beneficiaries, cost 20 percent more per recipient than traditional Medicare.
• Medicare can’t fix the nation’s healthcare system, but reducing overpayments to Advantage plans should be high on its agenda.