The 2022 Medicare Trustees Report estimates the date of the Medicare Part A Hospital Insurance Trust Fund insolvency has been delayed by two years, until 2028, despite considerable COVID related spending, which was more than offset by decreases in non-COVID spending.  The trustees assume that pre-pandemic levels of spending will resume in 2024 and that the long-term financial challenges for the program remain fundamentally unchanged.

Despite this, the Medicare Trustees Report continues to show the positive impact of the Affordable Care Act (ACA) on Medicare’s solvency; Part A Trust Fund is projected to pay full benefits until 2028 rather than the projected insolvency in 2017 prior to the enactment of the ACA.  Implementation of payment and delivery system reforms that emphasize coordinated care especially for people with multiple chronic conditions, incentives to reduce the rate of hospital readmissions, and a reduction in the rate of increase in payments to hospitals and private Medicare plans are improving Medicare’s financing. At the same time, under the ACA, millions of Medicare beneficiaries are receiving preventive screenings and wellness visits without copayments as well as additional assistance with their prescription drug costs.


Each year the Medicare Trustees release a report on the current status and projected condition of Medicare’s two trust funds over the next 75 years – the Hospital Insurance (HI) Trust Fund that finances Part A inpatient hospital and related care, and the Supplementary Medical Insurance (SMI) Trust Fund that finances both Part B physician and outpatient care, and Part D that pays for prescription drugs.

Medicare Part A (HI Trust Fund) is primarily financed by payroll taxes on earnings that are paid by employees, employers and the self-employed. Employees and employers each pay 1.45 percent in taxes on all earnings. The self-employed contribute 2.9 percent, the equivalent of the combined employer and employee tax rates.

Medicare Parts B and D (SMI Trust Fund) are financed by payments from federal general fund revenues (about 75 percent) and by monthly premiums charged to beneficiaries (about 25 percent). Because Medicare Part B and Part D are automatically financed through general revenues and beneficiary premiums to meet estimated program costs each year, the SMI Trust Fund is adequately financed in both the short and long term.

Financial Outlook of the Medicare Program

The Medicare Part A (HI) Trust Fund will be solvent until 2028, which is 2 years later than the estimate made last year. In 2028, payroll taxes alone are estimated to be sufficient to cover 90 percent of HI costs.

Solvency has improved by 11 years from the date that was projected before enactment of the Affordable Care Act. This legislation improved Medicare’s financing by reducing the rate of increase in provider payments, phasing out overpayments to Medicare Advantage plans and increasing Medicare payroll taxes for high-income individuals and couples.

Medicare’s actuarial shortfall decreased from last year. The HI Trust Fund projected 75-year actuarial deficit has decreased to 0.70 percent of taxable payroll compared with last year’s estimate of 0.77 percent. This is much less than the 3.88 percent of payroll that the Trustees estimated before the Affordable Care Act became law. In other words, the HI Trust Fund’s fiscal imbalance could be solved by increasing payroll taxes by 0.70 percent, by reducing the program’s spending by a corresponding amount, or by some combination of the two.

Medicare spending remained stable as a share of the economy. The Trustees project that Medicare’s costs (for both the HI and SMI Trust Funds) will grow from 3.9 percent of gross domestic product (GDP) in 2021 to 6.5 percent of GDP in 2046. This increase occurs because the number of people receiving benefits will grow as the baby boom generation retires. Thereafter, Medicare’s costs are projected to grow more slowly, reaching 8.6 percent of GDP in 2096. Again, these increases are lower than what was projected before enactment of health care reform when Medicare’s costs were projected to grow from 3.5 percent of GDP in 2009 to 11.3 percent of GDP in 2083.

Costs for Part B (SMI Trust Fund) are growing due to the aging population and rising health care costs. Part B spending, which was 1.9 percent of GDP in 2021, is projected to increase to 3.6 percent in 2096.

Medicare Part B Premium and Deductible

The Part B standard monthly premium for 2023 is projected to be $170.10, the same as 2022.

Higher-income beneficiaries (incomes exceeding $91,000 for an individual and $182,000 for a couple) pay larger income-related monthly premiums, which are projected to range from $238.10 to $578.30 in 2023, the same as 2022.  The Bipartisan Budget Act of 2018 established a new income-related premium threshold. Since 2019, individuals with incomes at or above $500,000 a year (or couples at or above $750,000) pay premiums that cover 85 percent of program costs, a five-percentage point increase over prior law.

In 2023 the Part B annual deductible is projected to stay the at $233, the same as it was in 2022.

Medicare Part D

Part D expenditures as a percent of GDP are expected to increase from 0.46 percent in 2022 to 0.84 percent in 2096. Over the next five years years, aggregate Part D costs are projected to increase at 7.4 percent annually.

The base Part D monthly premium is $33.37 in 2022 and is estimated to be $32.90 in 2023.

In 2022, Part D enrollees with incomes exceeding the threshold of $91,000 for an individual and $182,000 for a couple are paying an income-related monthly adjustment amount in addition to their normal plan premium, ranging from $12.40 to $77.90 per month. In 2023 this range is estimated to decrease to between $12.30 and $76.80. The Part D annual deductible, which is $480 in 2022, will be $505 in 2023.

Parts B and D Out-of-Pocket Costs

The Medicare Trustees project that by 2096, Parts B and D out-of-pocket costs (premiums and cost-sharing amounts) will consume 42 percent of the average Social Security check compared to 28 percent in 2022.


Medicare faces a long-term financial challenge due to the large increase in the number of beneficiaries as baby boomers reach age 65, skyrocketing prescription drug prices and overall health care inflation that continues to increase at too high a rate.

It is critical that we continue to implement reforms included in the Affordable Care Act that are containing costs and promoting access to quality health care. This includes supporting coordinated care through Accountable Care Organizations (ACOs), medical homes, bundled payments, and reducing hospital readmissions and hospital-acquired infections, as well as efforts to further reduce spending due to waste, fraud and abuse. However, while we support the mission of ACOs to coordinate care and better manage chronic conditions, we oppose the participation of private insurers and equity firms and any affiliated entities in ACO governance or management. Venture capital firms should not inform health care decision-making.

The ACA reforms mentioned above, along with requirements in the law to slow the rate of increase in provider payments and reduce overpayments to Medicare Advantage plans, are necessary to prevent Medicare costs from becoming unsustainable for both beneficiaries and the federal government.

The National Committee supports strengthening Medicare’s financing without shifting costs to beneficiaries by requiring pharmaceutical manufacturers to negotiate the cost of prescription drugs with manufacturers, putting inflation controls on drugs used under Medicare Part B, ending pay-for-delay deals and other gaming by pharmaceutical makers limit access to generics and drive up drug costs. YOU CAN TRUSTHISTORY OF NCPSSMPRESIDENT’S MESSAGENCPSSM FOUN