Fact Check: Medicare Is Already Functionally Insolvent

The recently released Medicare trustees report estimates the program’s Part A trust fund faces insolvency in 2028, two years later than last year’s estimate. Some might think that represents a major improvement in the program’s fiscal position. But a fact-checker—at least a politically honest one—might say the 2028 projection lacks important context.

In reality, Medicare faces a series of financial challenges, many of them created by fiscal gimmicks, that make the program’s shortfalls much greater than the “official” estimates suggest. Politicians have been hiding the hard facts about Medicare for decades, and when they finally have to face the fiscal music—which will happen sooner rather than later—the American people will not like what they hear.

Obamacare Double-Counting

In truth, Medicare’s trust fund is already insolvent, and has been for several years. In 2009, the last year before Obamacare’s passage, the program’s actuaries estimated trust fund insolvency in 2017—five years ago. But suddenly, the year that Obamacare passed, the insolvency date got extended until 2029. What happened?

As some might recall, Obamacare lowered Medicare spending by $718 billion and raised several Medicare-related taxes. What happened with that money is such a Washington politician’s gimmick that the politicians deserve to explain it themselves: