To follow is the National Committee to Preserve Social Security and Medicare overview of the 2023 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medicare Insurance Trust Funds. The Boards are composed of the Secretaries of Treasury, Social Security, Health and Human Services and Labor. Each year the Medicare Trustees release a report on the current status and projected condition of Medicare’s 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. The report also discusses the Part D program that pays for prescription drugs.

Principal Findings

The report projects that the date of depletion of the Medicare Part A Hospital Insurance (HI) Trust Fund will be 2031, or three years later than the date projected in the 2022 report. Deficits in income relative to expenditures from the HI trust fund begin in 2025, and by 2031, the Trustees project that HI revenues will cover 89 percent of program costs. By comparison, because the Part B SMI and Part D trust funds are mainly financed with general revenues, and not limited primarily to payroll tax revenues like the HI trust fund, they are deemed to be “adequately financed” into the foreseeable future.

The report notes that “current-law projections indicate that Medicare still faces a substantial financial shortfall that will need to be addressed with further legislation,” and recommends that “such legislation should be enacted sooner rather than later to minimize the impact on beneficiaries, providers, and taxpayers.” The Trustees also note that the Medicare Part B premium in traditional Medicare will rise next year to $174.80 a month, representing a $10, or 6 percent, monthly increase. In 2024 the Part B annual deductible is projected to be $240, up from $226 in 2023. In 2024, the base Part D monthly premium is estimated to be $33.30.


Released this year on March 31, 2023, the Medicare Trustees Report is submitted annually to Congress. This year’s version is the 58th report, with the first issued in 1965, when the program was enacted.

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. The Part A trust fund pays for inpatient hospital care, some home health, and hospice.

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. The Part B trust fund finances outpatient hospital or physician services, some home health and dialysis care.

The Medicare Trustees report also covers the Part D trust fund that finances prescription drug coverage, and which derives funding from beneficiary premiums, state payments for beneficiaries enrolled in both Medicare and Medicaid, fees on manufacturers and importers, and HI and SMI general fund transfers. It also analyzes certain enrollment and expenditure trends for insurance plans participating in Medicare Advantage (the name for private health maintenance organizations that are paid on a capitated basis for Part A and B services), also known as the Part C program.

Overall, the Medicare Trustees Report continues to show the positive impact of the 2010 Affordable Care Act (ACA) on Medicare’s solvency, when the date of depletion was 2017.  Implementation of ACA payment and delivery system reforms that emphasize coordinated, integrated care, especially for people with multiple chronic conditions, together with incentives to reduce the rate of hospital readmissions and a slowing in the rate of payment increases to hospitals and MA plans, are improving Medicare’s financing. At the same time, due to the ACA, millions of Medicare beneficiaries each year are receiving preventive screenings and wellness visits without copayments and assistance with prescription drug costs.

The report also credits the Inflation Reduction Act of 2022 with having “wide-ranging provisions, including those that restrain price growth and negotiate drug prices for certain Part B and Part D drugs and that redesign the Part D benefit structure to decrease beneficiary out-of-pocket costs.”

To extend the viability of the HI trust fund further into the future, the Biden Administration has put forward plans in its Fiscal Year (FY) 2024 budget submission to Congress to strengthen Medicare’s finances.  Many of the proposed provisions would bring more revenue into the program, rather than cutting beneficiary benefits.

Financial Outlook of the Medicare Program

The Medicare Part A (HI) Trust Fund will be solvent until 2031, or 3 years later than the estimate made last year. In 2031, payroll taxes alone are estimated to be sufficient to cover 89 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 0.62 percent of taxable payroll compared with the estimate in last year’s report of 0.77 percent. This is also much less than the 3.52 percent of payroll that the Trustees estimated before the Affordable Care Act became law. With regard to the one-year change, the Trustees note that “projected HI cost rates shown in this report are lower than those from the 2022 report for all years because of (i) lower health care utilization through 2032 due to updated expectations for health care spending following the COVID-19 pandemic…and (ii) higher taxable payroll in most years resulting from the changing economic and demographic assumptions.”

Medicare spending remained stable as a share of the economy. The Trustees estimate that Medicare’s costs (for both the HI and SMI Trust Funds) will grow from 3.7 percent of gross domestic product (GDP) in 2022 to 6 percent of GDP in 2047 and 6.1 percent by 2097. This increase is occurring because the number of people receiving benefits is growing as the baby boom generation retires. Overall, the Trustees note that “for all parts of Medicare, growth in the number of beneficiaries is highest over the next 10 years, as the baby boom generation continues to enter Medicare, and slows continually thereafter.” Prior to the enactment of the ACA, Medicare’s costs were projected to grow from 3.5 percent of GDP in 2009 to 11.3 percent of GDP by the early 2080’s.

Costs for Part B (SMI Trust Fund) are rising due to the growth of the senior population, and due to the increase in health care costs.  Therefore, Part B spending, which was 1.8 percent of GDP in 2022, will increase to 3.5 percent by 2097.

Medicare Part B Premium and Deductible

The Part B standard monthly premium for 2024 is projected to be $174.80, a $10 increase over 2023, but about the same as 2022 ($170.10).

Higher-income beneficiaries – who have incomes exceeding $97,000 for an individual and $194,000 for a joint return — will pay larger income-related monthly premiums, which are designed to cover 35, 50, 65, 80 or 85 percent of the average program cost, compared to 25 percent for standard premiums. The 85 percent amount applies to individuals with incomes at or above $500,000 a year, or couples at or above $750,000, and equates to $419.40 per month.

In 2024 the Part B annual deductible is projected to be $240, up from $226 in 2023.

Medicare Part D

Over the long term, Part D expenditures as a percent of GDP are expected to increase from 0.5 percent in 2023 to 0.7 percent in 2097.

In 2024, the base Part D monthly premium is estimated to be $34.70. Similar to the Part B surcharges for high-income beneficiaries, Part D premiums are greater for wealthier beneficiaries, with premiums calculated to be the difference between 35, 50, 65, 80 or 85 percent and 25 percent, applied to the national average monthly bid amount. The 85 percent amount applies to individuals with incomes at or above $500,000 a year, or couples at or above $750,000, and their Part D premium is expected to be $81 per month in 2024. In 2022, 3.6 million beneficiaries paid a Part D income-related premium.

The Part D annual deductible, which is $505 in 2023, will be $545 in 2024; the initial benefit limit is $4660 in 2023 and will be $5,030 in 2024; and the catastrophic threshold in 2023 is $7,400 and will be $8,000 in 2024.

Under the design of a standard Part D plan, a deductible applies, followed by a copayment of 25 percent of remaining costs up to an initial benefit limit.  Once beneficiaries reach the initial benefit limit, they continue to pay 25 percent for both generic drugs and brand-name drugs, plus a small portion of the pharmacy dispensing fee (about $1-$3) until a beneficiary’s total out-of-pocket costs reaches a catastrophic threshold limit.  Thereafter, beneficiaries currently pay a 5 percent coinsurance on prescription drugs.

Starting in 2024, as a result of the enactment of the Inflation Reduction Act, the 5 percent coinsurance requirement for catastrophic coverage will be eliminated. And the catastrophic threshold for out-of-pocket spending will be lowered to $2,000 a year beginning in 2025.

Parts B and D Out-of-Pocket Costs

The Trustees estimate that by 2097, Parts B and D out-of-pocket costs in the form of premiums and cost-sharing amounts, will consume a projected 42 percent of the average Social Security check, compared to 28 percent in 2023.


Medicare continues to face financial challenges due to the demographics of the large baby boomer population that is becoming eligible for program benefits, prescription drug prices that are in many cases still too high, and overall health care inflation.

Accordingly, it is critical that we continue to implement reforms included in the ACA and the Inflation Reduction Act that are working to gradually slow cost increases while promoting access to quality health care. This includes supporting coordinated care through Accountable Care Organizations (ACOs) and other Alternative Payment Models (APMs), medical homes, highly coordinated and integrated models such as PACE (Program of All-Inclusive Care for the Elderly) and bundled payments. We also recommend further efforts aimed at reducing hospital readmissions and hospital-acquired infections, and expanded accountability and transparency measures that can reduce waste, fraud and abuse and stop the siphoning off of Medicare and Medicaid funding to related parties. 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 earlier, 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 broadening the number and types of prescription drugs subject to price negotiations, ending pay-for-delay deals and other gaming by pharmaceutical makers limit access to generics and drive-up drug costs. In addition, we support Medicare legislative proposals in the President Biden’s FY 2024 budget that would extend Part A trust fund solvency by asking the wealthy to pay their fair share of Medicare payroll and investment taxes, and by requiring that savings from additional prescription drug price reforms be credited to the Part A fund.