![]() ![]() ![]() Overview of Medicare Spending Medicare Accounts for 21% of National Health Spending and 10% of the Federal Budget The Medicare Hospital Insurance (Part A) trust fund, which pays for inpatient hospital, skilled nursing facility, home health and other Part A services, is projected to be depleted in 2028, based on the latest projections from the Medicare Trustees.Funding for Medicare, which totaled $888 billion in 2021, comes primarily from general revenues (46%), payroll tax revenues (34%), and premiums paid by beneficiaries (15%).Average annual growth in Medicare per capita spending is projected to be 5.4% between 20, on par with the 5.3% growth rate in private health insurance per capita spending over these years.Medicare spending (net of income from premiums and other offsetting receipts) is projected to rise from 10% of total federal spending in 2021 to 18% in 2032, and from 3.1% to 3.9% of GDP over these years, due to growing Medicare enrollment, increased use of services and intensity of care, and rising health care costs.Payments to Medicare Advantage plans for Part A and Part B benefits nearly tripled as a share of total Medicare spending between 20, from $124 billion to $361 billion, due to steady enrollment growth in Medicare Advantage plans and higher per person spending in Medicare Advantage than in traditional Medicare.Spending on Part B services (including physician services, outpatient services, and physician-administered drugs) accounts for the largest share of Medicare benefit spending (48% in 2021). In 2021, Medicare benefit payments totaled $829 billion, up from $541 billion in 2011.Key Facts about Medicare Spending and Financing ![]() The brief highlights trends in Medicare spending and key drivers of spending growth, including higher enrollment, growth in health care costs, and increases in payments to Medicare Advantage plans. This brief provides an overview of Medicare spending and financing, based on the most recent historical and projected data published in the 2022 annual report of the Board of Medicare Trustees and the 2022 Medicare baseline and projections from the Congressional Budget Office (CBO). Medicare, the federal health insurance program for 65 million people ages 65 and older and younger people with long-term disabilities, helps to pay for hospital and physician visits, prescription drugs, and other acute and post-acute care services. ![]()
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