The Good, the Bad, and the Uncertain News of the 2024 Medicare Trustees Report

Each year around April or May, the Trustees of the Social Security and Medicare Trust Funds release their accounting of the current, short-term (10-years), and long-term (75-years) projections of revenues and expenditures for the world’s largest entitlement programs. These Reports are prepared by the actuaries at the Social Security Administration (SSA) and the Centers for Medicare & Medicaid Services (CMS). Their work impacts the lives of 67 million current beneficiaries, 183 million workers who pay into the Trust Funds, and future generations yet to be born. The Reports are also loaded with vital data about economic and demographic assumptions.

In Federal Fiscal Year 2025, Social Security will pay out approximately $1.6 trillion in benefits. CMS obligations for Medicare, Medicaid, the Children’s Health Insurance Program (CHIP), and Marketplace plans totaled $1.75 trillion in FY 2023. If the combined spending of SSA and CMS, plus the state share of Medicaid and CHIP were a nation, it would represent the fifth largest economy of the world between Germany and India.

Between Social Security and Medicare, there are four separate Trust Funds:

  • Old-Age Survivors Insurance (OASI) Trust Fund
  • Disability Insurance (DI) Trust Fund
  • Hospital Insurance (HI)
  • Supplemental Medical Insurance (SMI) Trust Fund


The OASI, DI, and HI Trust Funds are funded through payroll taxes, interest on reserves, and taxation of benefits. Collectively, the Trust Fund expenditures exceed income requiring the liquidation of assets. The OASI reserves will be depleted in 2033 and will have enough income to pay only 79% of scheduled benefits. The DI Trust Fund will be able to pay 100% of scheduled benefits through at least 2097. The HI Trust Fund will be depleted in 2036 and will have enough income to pay only 83% of scheduled benefits. Because the SMI Trust Fund is financed by general revenues (approximately 75% of “income”) and premiums paid by beneficiaries (approximately 25% of “income”), it will always be “solvent.”


The Medicare program is organized by four Parts:

  • Part A: inpatient hospital services, skilled nursing facilities, hospice, home healthcare
  • Part B: physician services and other professional services, outpatient services, and durable medical equipment, some preventive services
  • Part C: Medicare Advantage program in which payments are made to private insurance companies to manage the benefits covered by the three other Parts
  • Part D: Outpatient prescription drug benefit


Good News

The good news about Medicare is that the solvency of the HI Trust Fund has been extended until 2036, five years longer in comparison to last year’s Report. During 2023, total revenues were $415.3 billion and expenditures were $403.1 billion, which added $12.2 billion to reserves.3

Payroll taxes were 4.1 percent higher, primarily because there were more covered workers and average wages were higher than the prior year’s projections. Expenditures were slightly lower than the prior-year projections. The addition of younger and healthier “baby boomers” to Medicare has temporarily helped to lower per-beneficiary costs.

Bad News

In 2023, Part B revenues totaled $480.9 billion and expenditures totaled $502.9 billion which resulted in a reduction of assets by $22 billion.

Spending for Part B is now projected to increase on average of 8.8 percent and by 8.2 percent for Part D, compared to the average annual Gross Domestic Product (GDP) growth rate of 4.3 percent.

For the seventh consecutive year, the Trustees are issuing a Medicare funding warning. The warning is triggered by a determination of excess general revenue. This means that within seven years, the difference between Medicare’s total outlays are projected to exceed its dedicated funding sources (HI taxes, beneficiary premiums, state payments for Part D, and drug fees) by 45 percent.

It is unfortunate to note that the Trustees are all government officials by the office that they hold—The Secretary of the Treasury, the Secretary of Labor, the Secretary of Health and Human Services, and the Commissioner of the Social Security Administration. By law, the President appoints two Trustees to represent the Public who are subject to confirmation by the Senate. The Public Trustee positions have been vacant since July 2015.

Uncertain News

The actuaries are required to make projections based on current law. Current law includes reductions in provider payment updates for all Part A services and some Part B services. The magnitude of these reductions is significant and therefore likely unrealistic. Thus, the Report includes a section on “Illustrative Alternative Projections” as prior Reports have.

Findings include:

  • “In 2018, the Medicare payment rates for inpatient hospital services declined to about 60 percent of those paid by private insurance.”
  •  “By 2040, simulations suggest that roughly one-third of hospitals and over 50 percent of skilled nursing facilities and home health agencies would have negative total facility margins, raising the possibility of access and quality-of-care issues for Medicare beneficiaries.”
  •  “In view of these issues, it is important to note that the actual future costs for Medicare may exceed the projections in this report, possibly by substantial amounts.”
  • “It is conceivable that health care providers could improve their productivity, reduce wasteful expenditures, and take other steps to keep their cost growth within the bounds imposed by the Medicare price limitations. For such efforts to be successful in the long-range, however, providers would have to generate and sustain unprecedented levels of productivity gains—a very challenging and uncertain prospect.”



“A transformation of health care in the U.S., affecting both the means of delivery and the method of paying for care, is also a possibility.”

“The ability of new delivery and payment methods to lower cost growth rates is uncertain at this time. Preliminary indications are that some of these delivery reforms have had modest levels of success in lowering costs. It is too early to tell if these reductions in spending will continue or if they will grow to the magnitude needed to align with the statutory Medicare price updates.



3 Medicare Trustees Report, p.46.

4 Medicare Trustees Report, p.8.

5 Ibid. p. 188, 189, 190.

6 Ibid. p. 190, 191



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