Medicare reserves unchanged despite COVID-19 pandemic

Medicare reserves unchanged despite COVID-19 pandemic
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Medicare's ability to pay for hospital services did not change as a result of the coronavirus pandemic and will be able to pay out full benefits until 2026, the same estimate as last year, according to a report released Tuesday by the program's trustees.

In the short term, the pandemic is expected to greatly reduce payroll tax revenues because employment and earnings fell significantly compared to last year. Medicare also spent more covering the cost of testing, treatment and vaccines. 

But the report found spending for non-coronavirus care declined significantly because of people delaying or completely skipping elective services, more than offsetting those additional costs.


Because of the large wave of COVID-19 cases in early 2021, spending unrelated to COVID-19 is estimated to be lower than previously expected for the beginning of the year, the report said. That spending is expected to return in 2022, and the program will run deficits until it's depleted in 2026.

After those reserves are depleted, the program would be able to pay 91 percent of its total scheduled benefits. 

So while Medicare may have taken a short-term hit, the longer-term situation remained relatively unchanged. But the report noted there is a large amount of uncertainty, as pandemic effects occur mainly in the short range and projections may change. 

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The trustees’ annual reports have repeatedly warned about the encroaching insolvency of Medicare, but efforts to pare down spending, transfer savings or even strengthen the program have not found legislative success.

Democrats want to expand Medicare's benefits to cover dental, hearing and vision as part of a massive social "infrastructure" bill. The effort would not affect the hospital trust fund, but fiscal hawks and congressional Republicans used Tuesday's report to slam the effort.