The Hospital Insurance trust fund (Medicare - Part A), which covers hospital services, home health care, hospice stays, and skilled nursing services for the elderly, is in much deeper trouble than Social Security. Like Social Security, the Medicare trust fund holds government securities in its portfolio. These "assets" are projected to be exhausted by the year 2001. However, the fund's total annual income is already lower than the annual outgo, implying that some non-payroll taxation is already being devoted to redemption of government securities held in the trust fund's portfolio.
Suggested citation: “Medicare Insolvency,” Federal Reserve Bank of Cleveland, Economic Trends, no. 97-05, pp. 15, 05.01.1997.