Medicare benefits provide access to affordable healthcare for millions of seniors and those with certain disabilities in the United States, meaning the future of this vital program is often on the minds of recipients. In recent decades, there have been a number of concerns as to the viability of Medicare in the future, both in terms of financing the program and ensuring that its liabilities are covered. These concerns raise the question as to how long Medicare can continue in its current configuration, but they also cause potential future recipients to wonder whether Medicare will still be around in 2050.
Will Medicare Be Around in 2050?
Before looking into the future of Medicare coverage and its associated benefits, it’s first important to look into the past. Medicare was created in 1965 as a means to address the sudden explosion in births that followed the end of WWII. The so-called Baby Boomers are a generation that makes up the bulk of Medicare recipients in 2020, and more are retiring and taking advantage of Medicare every single day. Additionally, life expectancy continues to rise in the United States as medical innovations and medications are able to prevent, treat and cure many ailments that previously could have been fatal.
Funding for Medicare comes mainly from contributions paid through an income tax mandated by the Federal Insurance Contributions Act (FICA). This means that Medicare can only exist as long as there are enough people working and paying into the system, and at the same time, there are not enough recipients taking money out of the system to outweigh the contributions. This delicate balance depends on things working as intended, but what happens if demand outstrips supply or a major economic downturn leads to large unemployment figures?
From Insolvency to Solvency
Current estimates are that Medicare will run out of funding for hospital insurance as soon as 2026, and other parts of Medicare aren’t that far behind. Because of changing economies and the aforementioned longer life spans of Americans, Medicare looks to be heading toward insolvency sooner rather than later. Combine this with lower birth rates in the United States in the current generation, and it seems like some major changes will need to be put into place in order to bring the program back into a stable place of solvency.
One way to do this is to require larger premiums from those who receive Medicare benefits and combine this with higher FICA income taxes deducted from workers’ paychecks. Another way to tackle the problem is to encourage competition among healthcare providers in order to drive prices down. This can be done through requiring more transparency and offering Medicare recipients alternative covered services, including more tele-health options. By cutting costs while raising taxes, it may be possible to keep Medicare afloat for the time being, but as a whole, the program may need to undergo even more dramatic changes in the future.
Talk to Your Medicare Coverage Administrator
Whether you currently receive Medicare benefits or you will be taking advantage of Medicare coverage in the future, now would be a good time to discuss your needs and options with a Medicare plan administrator. These professionals will be able to guide you in selecting the options that are right for you now, but they will also be able to offer you solutions for your future healthcare needs under Medicare’s current benefits and its anticipated future changes.