Will Donald Trump Address and potentially Resolve Medicare's Major Issue by 2025?
Will Donald Trump Address and potentially Resolve Medicare's Major Issue by 2025?
Tough challenges ahead. Immigration. Inflation. The Russia-Ukraine military conflict. Threats to the U.S. dollar. Trade imbalances.
These are some of the issues President-elect Donald Trump has vowed to tackle in his second term. But what about a government initiative that serves over 66 million Americans and is facing a serious predicament? Will Trump solve Medicare's primary issue in 2025?
Medicare's looming predicament
Medicare was established in 1965 to offer health insurance for Americans aged 65 and above. Initially, it consisted of Part A (hospital insurance) and Part B (medical insurance for outpatient healthcare services). In 1999, Medicare Advantage (Part C) plans were added through the Balanced Budget Act of 1997. Medicare Part D (prescription drug coverage) was introduced in 2006.
Medicare Parts B and D are financially stable. Their premiums are adjusted yearly based on the projected costs for the following year.
However, it's a different scenario for Medicare Part A and the Medicare Advantage portion funded by Part A revenues. The 2024 Medicare Trustees report predicts that total Medicare Part A spending will surpass revenue by 2030. At that point, the cash reserves saved in the Federal Hospital Insurance Trust Fund will be used to make up for the revenue deficit. However, the Medicare Trustees estimate that this trust fund will be depleted by 2036.
Unless measures are taken to boost revenue or lower expenses, Medicare benefits need to be reduced starting in 2036. However, ongoing revenue from the government and payroll taxes is expected to cover around 89% of the benefits.
Trump's Medicare strategies
With Medicare predicted to start operating in the red a year after Trump leaves office, what plans does the president-elect have for this significant federal program? Most importantly, Trump has promised not to cut Medicare benefits.
During his first term, Trump's proposed budgets included Medicare cost reductions. However, these reductions wouldn't have impacted Medicare beneficiaries significantly. Moreover, Trump's budgets didn't get approved by Congress.
Trump has consistently maintained that he won't reduce benefits for either Medicare or Social Security in his second term, stating that he "won't reduce a single penny" from either program. Instead, he has suggested enhancing benefits in one significant manner by covering in-home elderly care.
Perhaps the most notable change Trump might make to Medicare is to focus more on Medicare Advantage over traditional Medicare. His choice to lead the Centers for Medicare and Medicaid Services, Dr. Mehmet Oz, is a strong advocate for Medicare Advantage.
Some of Trump's other policy proposals could influence Medicare as well. For example, the Republican National Committee (RNC) 2024 platform referenced Trump's plan for strict immigration enforcement as a means to financially safeguard Medicare by preventing illegal immigrants from enrolling in Medicare.
The resolution isn't imminent
However, the RNC platform stated that the GOP would ensure that Medicare "remains financially stable for generations to come," but it didn't detail how this would be achieved other than "reversing harmful Democrat policies and unleashing a new Economic Boom." President-elect Trump hasn't provided any specific strategies on how he would handle Medicare's predicted revenue deficit either.
Trump suggested increasing oil and gas drilling during his presidential campaign as a potential solution to bolster Social Security's finances. Could this approach help keep Medicare solvent? It's unlikely.
The nonpartisan Committee for a Responsible Federal Budget conducted an analysis that found Social Security's financial problems wouldn't be solved even if all federal lands were made available for drilling and all revenue generated was allocated to Social Security. If this proposal isn't enough to address Social Security's issues, it certainly won't address Medicare's.
It appears highly improbable that Trump will resolve Medicare's main issue in 2025. Since the program won't begin to operate in the red until the year after he leaves office, Trump might choose to leave the issue to the next administration. But in the ever-changing landscape of politics, anything is possible.
In light of Medicare's predicted financial struggles, with Part A spending expected to exceed revenue by 2030, it's important to consider potential solutions from President-elect Trump. Despite his pledge not to cut Medicare benefits, Trump has suggested enhancing them by covering in-home elderly care. However, he hasn't provided specific strategies to address the predicted revenue deficit. (Medicare's Predicament and Trump's Medicare Strategies)
Given Medicare's reliance on Part A revenues, immigration policies could potentially impact its financial stability. The Republican National Committee (RNC) 2024 platform mentioned preventive measures against illegal immigrants enrolling in Medicare to financially safeguard the program. (Trump's Medicare strategies)