Fix Health Care Policy

Heritage’s new chart series, “Medicare at Risk: Visualizing the Need for Reform,” shows that, without the necessary structural reform, Medicare’s finances will have devastating consequences on the federal budget, not to mention taxpayers and seniors alike.

Medicare’s Impact on the Budget. Medicare spending is rising faster than any other part of the federal budget, and it’s a major driver of runaway deficit spending in the not-so-distant future. Retiring baby boomers and rising health care costs will cause Medicare’s shortfall to contribute to 81 percent of federal deficits by 2040. Clearly, the federal deficit cannot be contained without addressing Medicare’s structural problems.

Medicare’s Impact on Taxpayers. Medicare spending isn’t just busting the federal budget; its also consuming more of household budgets. In 1970, average Medicare spending per American household was $129. In 2021—just nine years from now—spending per household will be a whopping $7,987. Unless there is significant reform to deal with these rising costs, Americans will be faced with automatic benefit cuts or steep tax increases. The Medicare Part A payroll tax would have to increase by 84 percent just to make Part A alone solvent.

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Tags: budget, charts, debt, economy, impact, Medicare at risk, slideshow, taxpayers