The recently released 2014 Social Security and Medicare Trustees’ Reports project rising enrollment and costs—and revenue growth that falls far short of projected needs. The reports should prompt a serious examination of the trust funds’ current and projected financial status.
This chart updates a previous Mercatus Center chart comparing the projected enrollment and costs for Medicare programs in 1975, 2013, and 2040. The number of Medicare enrollees more than doubled to 51.9 million between 1974 and 2014 and the real cost per enrollee quintupled. Based on these projections, by 2040 Medicare will cover about 89.2 million people, at roughly three times today’s cost per beneficiary. By 2040, it will cost a projected $31,900 (in real 2014 dollars) to cover each enrollee.
The report projects dwindling trust funds, greater enrollment, higher costs per beneficiary, and insufficient revenues to fund future payouts. This chart shows that inaction is not an option. Medicare programs are in dire need of fundamental reform, and time is running out.