5 Fixes That Could Help Save Medicare

There have been dire warnings about the overall health of Medicare for years, yet policymakers have been slow to act. Here's how Congress can shore up the program.

A picture of a piggy bank next to a calculator with a stethoscope.
(Image credit: Getty Images)

For years, the warnings about medicare's inadequate funding and rising costs have been dire. Congress knows it needs to do something, but politics and the complexity of the task keep even partial fixes in stalemate. "The financial health of Medicare is terrible," says Robert Moffit, a senior fellow in domestic policy studies specializing in health care and entitlement programs at the Heritage Foundation, a conservative think tank. Medicare costs almost a trillion dollars each year, he says. "The trustees have been warning Congress and the president that it's a problem that can't be ignored."

By 2026, Medicare's trust fund for Part A is expected to be depleted. Part A, which covers inpatient care at hospitals and skilled nursing facilities, is funded mostly through a 2.9% payroll tax, with employers and workers each contributing 1.45% (high earners contribute even more). The Congressional Budget Office predicts that an additional $517 billion is needed, and that's just to cover the program's shortfall from 2026 to 2031. Otherwise, Medicare has enough revenue to pay for about 91% of Part A expenses starting in 2026.

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Senior Retirement Editor, Kiplinger.com

Jackie Stewart is the senior retirement editor for Kiplinger.com and the senior editor for Kiplinger's Retirement Report.