Medicare Financial Status, Budget Impact, and Sustainability—Which Concept is Which?
Richard S. Foster, F.S.A.
Date of Pub
Richard S. Foster, F.S.A. and M. Kent Clemens, F.S.A.
Medicare is continually undergoing
change, as it must in order to reflect advances
in medical technology, new health care
delivery systems, financial pressures, and
other developments. Modifications to the
program are debated by policymakers in
Congress and the administration, together
with academic experts and others. These
debates would be improved if policymakers
and the public had a clearer understanding
of Medicare and certain commonly
cited views of the program’s overall status.
Three such concepts—the financial status
of the Medicare trust funds, the impact of
Medicare on the Federal budget, and the
long-run sustainability of Medicare—are
often confused with each other and are sometimes
used interchangeably. Each concept is
important but needs to be used for its own
purpose. This article clarifies the differences
among these three views of Medicare and
provides examples of each.