This brief examines the challenges facing Medicare as it celebrates 50 years.

1. CHAIRMEN
MICHAEL BLOOMBERG
JUDD GREGG
EDWARD RENDELL
FOUNDERS
ERSKINE BOWLES
AL SIMPSON
STEERING COMMITTEE
PHIL BREDESEN
KENT CONRAD
DAVID COTE
PETE DOMENICI
VIC FAZIO
JIM MCCRERY
SAM NUNN
MICHAEL PETERSON
STEVEN RATTNER
ALICE RIVLIN
SCOTT SMITH
ANTONIO VILLARAIGOSA
ROBERT ZOELLICK
1900 M Street, NW · Suite 850 · Washington, DC 20036 · (202) 596-3597 · www.fixthedebt.org
The Campaign to Fix the Debt
Medicare at 50: A Check-Up
Medicare was created on July 30, 1965. As the venerable program turns 50, we
examine the issues that must be addressed so it can reach 100 years and beyond.
An aging population and rising health care costs will present significant challenges
 The population over 65 will grow by 75 percent in the next 25 years. Nine
percent of the population was 65 and over in 1965; 15 percent in 2015; and the
number will be 21 percent in 2040.
 Health care will grow faster than the economy. Average costs will grow more
than 4 percent per beneficiary from now through 2040.
Medicare will consume a larger share of the federal budget and push debt higher
 Medicare is currently the second largest federal program, behind Social
Security, and will become the largest program in the years to come.
 Medicare accounts for 16 percent of non-interest federal spending today and
that will grow to 24 percent by 2040.
 By 2031, every dollar of revenue we collect will go toward mandatory spending,
such as Medicare, Medicaid and Social Security, and interest on the debt.
 The growth of Medicare will crowd out other spending, including public
investments that can help grow the economy.
 Health care, particularly Medicare, will be the largest driver of future deficits
and debt.
Medicare’s finances will deteriorate, imperiling benefits
 The Medicare Part A (Hospital Insurance) trust fund will be exhausted by 2030,
resulting in a 14 percent cut in benefits.
 The disparity between benefits paid out and what is paid in is wide and growing.
 The Urban Institute estimated that an average wage earner turning 65 in 2015
would have paid $70,000 into Medicare in their lifetime and received $213,500
in lifetime benefits.
 Medicare beneficiaries typically receive $3 to $4 in benefits for every dollar they
pay in taxes.
 By 2030, Medicare taxes and premiums will cover less than 50 percent of
Medicare spending.