Medicare: Insolvency Projections
Patricia A. Davis
Specialist in Health Care Financing
July 3, 2013
Congressional Research Service
7-5700
www.crs.gov
RS20946
CRS Report for Congress
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epared for Members and Committees of Congress

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Medicare: Insolvency Projections

Summary
Medicare is the nation’s health insurance program for persons age 65 and older and certain
disabled persons. Medicare consists of four distinct parts: Part A (Hospital Insurance, or HI);
Part B (Supplementary Medical Insurance, or SMI); Part C (Medicare Advantage, or MA); and
Part D (the outpatient prescription drug benefit). The Part A program is financed primarily
through payroll taxes levied on current workers and their employers; these are credited to the HI
trust fund. The Part B program is financed through a combination of monthly premiums paid by
current enrollees and general revenues. Income from these sources is credited to the SMI trust
fund. As an alternative, beneficiaries can choose to receive all their Medicare services through
private health plans under the MA program; payment is made on their behalf in appropriate parts
from the HI and SMI trust funds. The Part D drug benefit is funded through a separate account in
the SMI trust fund and is financed through general revenues, state contributions, and beneficiary
premiums. The HI and SMI trust funds are overseen by a board of trustees that makes an annual
report to Congress concerning the financial status of the funds.
Almost from its inception, the HI trust fund has faced a projected shortfall. The insolvency date
has been postponed a number of times, primarily due to legislative changes that have had the
effect of restraining growth in program spending. The 2013 Medicare Trustees report projects
that, under intermediate assumptions, the HI trust fund will become insolvent in 2026, two years
later than estimated in the prior year’s report.
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Medicare: Insolvency Projections

Contents
Introduction ...................................................................................................................................... 1
Medicare Hospital Insurance (HI) Financing .................................................................................. 2
What Is the HI Trust Fund?.............................................................................................................. 2
History of HI Solvency Projections ................................................................................................. 3
Current Insolvency Projections ........................................................................................................ 6
What Would Happen If the Fund Became Insolvent? ...................................................................... 7
Financing Issues ............................................................................................................................... 8

Figures
Figure 1. Projected Number of Years Until HI Insolvency .............................................................. 4
Figure 2. HI Trust Fund Assets at Beginning of Year
as a Percentage of Annual Expenditures ....................................................................................... 7

Tables
Table 1. Year of Projected Insolvency of the Hospital Insurance Trust Fund in Past and
Current Trustees Reports .............................................................................................................. 4
Table A-1. Operation of the Hospital Insurance Trust Fund, Calendar Years 1970-2022 ................ 9
Table B-1. Tax Rates and Maximum Tax Bases ............................................................................ 11

Appendixes
Appendix A. Operation of the Hospital Insurance Trust Fund ........................................................ 9
Appendix B. Historical Payroll Tax Rates ..................................................................................... 11

Contacts
Author Contact Information........................................................................................................... 12

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Medicare: Insolvency Projections

Introduction
Medicare is a federal insurance program that pays for covered health care services of qualified
beneficiaries. It was established in 1965 under Title XVIII of the Social Security Act as a federal
entitlement program to provide health insurance to individuals 65 and older, and has been
expanded over the years to include permanently disabled individuals under 65.
Medicare consists of four distinct parts, A through D. Part A covers hospital services, skilled
nursing facility (SNF) services, home health visits, and hospice services. Most persons aged 65
and older are automatically entitled to premium-free Part A because they or their spouse paid
Medicare payroll taxes for at least 40 quarters (10 years) on earnings covered by either the Social
Security or the Railroad Retirement systems. Part B covers a broad range of medical services,
including physician services, laboratory services, durable medical equipment, and outpatient
hospital services. Enrollment in Part B is voluntary; however, most beneficiaries with Part A also
enroll in Part B. Part C provides private plan options, such as managed care, for beneficiaries who
are enrolled in both Parts A and B. Part D provides optional outpatient prescription drug
coverage.1
Medicare expenditures are driven by a variety of factors, including the level of enrollment, the
complexity of medical services provided, health care inflation, and life expectancy. In 2012,
Medicare provided benefits to about 51 million persons at an estimated total cost of $574 billion.
The Medicare program has two separate trust funds—the Hospital Insurance (HI) trust fund and
Supplementary Medical Insurance (SMI) trust fund. The Part A program, which is financed
mainly through payroll taxes levied on current workers, is accounted for through the HI trust
fund. The Part B and D programs, which are primarily funded through general revenue and
beneficiary premiums, are accounted for through the SMI trust fund.2 Both funds are maintained
by the Department of the Treasury and are overseen by a board of trustees that reports annually to
Congress concerning the funds’ financial status.3 Financial projections are made using economic
assumptions based on current law, including estimates of consumer price index (CPI), workforce
size, wage increases, and life expectancy.
Almost from its inception, the HI trust fund has faced a projected shortfall and eventual
insolvency. Because of the way it is financed, the SMI trust fund cannot become insolvent;
however, the Medicare Trustees continue to express concerns about the rapid growth in SMI
costs.4

1 For additional information on the Medicare program, see CRS Report R40425, Medicare Primer, coordinated by
Patricia A. Davis and Scott R. Talaga.
2 Payments are made for beneficiaries enrolled in Part C in appropriate portions from the HI and SMI trust funds.
3 Medicare Trustee reports may be found at http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-
Trends-and-Reports/ReportsTrustFunds/index.html.
4 For further information on Medicare financing, see CRS Report R43122, Medicare Financial Status: In Brief, by
Patricia A. Davis.
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Medicare: Insolvency Projections

Medicare Hospital Insurance (HI) Financing
Similar to the Social Security system, the HI portion of Medicare was designed to be self-
supporting and is financed through dedicated sources of income rather than relying on general tax
revenues. The primary source of income credited to the HI trust fund is payroll taxes paid by
employees and employers; each pays a tax of 1.45% on earnings. The self-employed pay 2.9%.
Unlike Social Security, there is no upper limit on earnings subject to the tax.5 The Patient
Protection and Affordable Care Act (ACA, P.L. 111-148 as amended) imposes an additional tax of
0.9% on high-income workers with wages over $200,000 for single filers, and $250,000 for joint
filers effective for taxable years beginning in 2013.6
Additional income to the HI trust fund consists of premiums paid by voluntary enrollees who are
not entitled to premium-free Medicare Part A through their (or their spouse’s) work in covered
employment; a portion of the federal income taxes paid on Social Security benefits;7 and interest
on federal securities held by the trust fund.
What Is the HI Trust Fund?
The HI trust fund is a financial account in the U.S. Treasury into which all income to the Part A
portion of the program is credited, and from which all benefits and associated administrative costs
of the program are paid. The trust fund is solely an accounting mechanism—there is no actual
transfer of money into and out of the fund.8
HI operates on a “pay-as-you-go” basis; the annual revenues to the HI trust fund, primarily the
taxes paid by current workers and their employers, are used to pay Part A benefits for today’s
Medicare beneficiaries. When the government receives Medicare revenues (payroll taxes),
income is credited by the Treasury to the appropriate trust fund in the form of special issue
interest-bearing government securities.9 (Interest on these securities is also credited to the trust
fund.) The tax income exchanged for these securities then goes into the general fund of the
Treasury and is indistinguishable from other cash in the general fund; this cash may be used for
any government spending purpose. When payments for Medicare Part A services are made, the
payments are paid out of the general treasury and a corresponding amount of securities is deleted
from (written off) the HI trust fund.

5 Prior to 1991, the upper limit on taxable earnings was the same as for Social Security. The Omnibus Budget
Reconciliation Act of 1990 (OBRA 90, P.L. 101-508) raised the limit in 1991 to $125,000. Under automatic indexing
provisions, the maximum was increased to $130,200 in 1992 and $135,000 in 1993. The Omnibus Budget
Reconciliation Act of 1993 (OBRA 93, P.L. 103-66) eliminated the upper limit entirely beginning in 1994.
6 See archived CRS Report R41128, Health-Related Revenue Provisions in the Patient Protection and Affordable Care
Act (ACA), by Janemarie Mulvey, for additional detail.
7 Since 1994, the HI fund has had an additional funding source—OBRA 93 increased the maximum amount of Social
Security benefits subject to income tax from 50% to 85% and provided that the additional revenues would be credited
to the HI trust fund.
8 There are about 200 federal trust funds. For additional information on how federal trust funds operate within the
context of the federal budget, see CRS Report R41328, Federal Trust Funds and the Budget.
9 Unlike marketable securities, special issues can be redeemed at any time at face value. Investment in special issues
gives the trust funds the same flexibility as holding cash.
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In years in which the trust fund spends less than the income it receives, it has a cash-flow surplus;
the trust fund securities exchanged for any income in excess of spending show up as “assets” on
the financial accounting balance sheets and are available to the system to meet future obligations.
The trust fund surpluses are not reserved for future Medicare benefits, but are simply
bookkeeping entries that indicate how much Medicare has lent to the Treasury (or alternatively,
what is owed to Medicare by the Treasury). From a unified budget perspective, these “assets”
represent future budget obligations and are treated as liabilities.
If, in a given year, the trust fund spends more than the income it receives, it has a cash-flow
deficit. In deficit years, Medicare can redeem any securities accumulated in previous years
(including interest). When the securities are redeemed, the government needs to raise the
resources necessary to pay for the securities, and the monies are transferred from the Treasury’s
general fund to the HI trust fund. When the assets credited to the trust fund reach zero, the fund is
deemed insolvent.
(See Appendix A for a discussion of recent and projected HI cash flows, and data on historical
and projected HI operations through 2022.)
History of HI Solvency Projections
The HI trust fund has never become insolvent. The Board of Trustees projected insolvency for the
HI fund beginning with the 1970 report, at which time the HI trust fund was expected to become
insolvent in only two years. (See Table 1 and Figure 1.) The insolvency date has been postponed
a number of times since the beginning of Medicare through a variety of methods. For example,
the payroll tax rate has been adjusted periodically by Congress as one of the mechanisms to
maintain the financial adequacy of the trust fund. (See Appendix B for historical payroll tax
rates.)
Other legislative changes have been made at various times to slow the growth in HI program
spending; generally, these measures were part of larger budget reconciliation laws that attempted
to restrain overall federal spending. To illustrate, in the mid-1990s, efforts to curtail Medicare
spending intensified as Congress considered legislation to bring the entire federal budget into
balance and culminated in the passage of the Balanced Budget Act of 1997 (BBA 97, P.L. 105-
33). In early 1997, the Medicare Trustees had projected that the HI trust fund would become
insolvent within four years, in 2001. Following the enactment of BBA 97, significant
improvements were made in the short-term projections over the next few years. The new
projections reflected a number of factors, including lower expected expenditures as a result of
changes made by BBA 97 (primarily resulting from modifications in Medicare Part C payments,10
and the establishment of prospective payment systems for certain Part A providers), continuing
efforts to combat fraud and abuse, and strong economic growth, which was expected to generate
more revenues to the trust fund from payroll taxes.

10 BBA 97 established the “Medicare+Choice” program under Part C. Medicare Part C was changed to “Medicare
Advantage” by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA, P.L. 108-173).
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Table 1. Year of Projected Insolvency of the Hospital Insurance Trust Fund in Past
and Current Trustees Reports
Year of
Year of
Year of
Year of
Year of
Year of
Trustees
projected
Trustees
projected
Trustees
projected
report
insolvency
report
insolvency
report
insolvency
1970
1972
1985
1998
1999
2015
1971
1973
1986
1996
2000
2025
1972
1976
1986 amended 1998
2001
2029
1973
none indicated
1987
2002
2002
2030
1974
none indicated
1988
2005
2003
2026
1975
late 1990s
1989
none indicated
2004
2019
1976
early 1990s
1990
2003
2005
2020
1977
late 1980s
1991
2005
2006
2018
1978
1990
1992
2002
2007
2019
1979
1992
1993
1999
2008
2019
1980
1994
1994
2001
2009
2017
1981
1991
1995
2002
2010
2029
1982
1987
1996
2001
2011
2024
1983
1990
1997
2001
2012
2024
1984
1991
1998
2008
2013
2026
Source: Intermediate projections of various Medicare Trustees reports, 1970-2013.

Figure 1. Projected Number of Years Until HI Insolvency
30
28 28
25
25
23
19
20
17
16
15
15 15
14
14
15
13
13
13
13
13
12
12 12
12
11
10
10
10
10
10
8
7
7
7
7
6
5
5
4
4
5
2
2
0

Source: Intermediate projections of various Medicare Trustees reports, 1970-2013.
Note: No specific estimates were provided by the Trustees for years 1973-1977 and 1989.
A number of observers contended that the savings achieved through the enactment of BBA 97
were greater than intended at the time of enactment and had unintended consequences for health
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care providers. As a result of these concerns, Congress subsequently enacted two measures (the
Balanced Budget Refinement Act of 1999 [BBRA 99, P.L. 106-113] and the Medicare, Medicaid,
and SCHIP Benefits Improvement and Protection Act of 2000 [BIPA 2000, P.L. 106-554]). These
measures were designed to reverse some of the BBA 97 spending reductions. Despite enactment
of both BBRA 99 and BIPA 2000, which increased program spending, the 2001 and 2002
Trustees reports continued to delay the projected insolvency date. These improvements in
solvency projections reflected both stronger-than-expected economic growth and lower-than-
expected program costs due to lower projected enrollment in Medicare Part C, heightened anti-
fraud and abuse initiatives, and lower-than-expected increases in health care costs.
However, the 2003 report shifted direction again. Its projected insolvency date was 2026, four
years earlier than the 2030 date projected in the 2002 report. The revision was due to lower-than-
expected HI-taxable payroll and higher-than-expected hospital expenditures.
The 2004 report projected that, under intermediate assumptions, the HI trust fund would become
insolvent in 2019, seven years earlier than projected in 2003. The revision of the projected
insolvency date was due to a number of factors, including slow wage growth (on which payroll
taxes are based) and faster growth in inpatient hospital benefits. In addition, the enactment of the
Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA, P.L. 108-173)
added significantly to HI costs, primarily through higher payments to rural hospitals and to
private plans under the MA program.11
The 2005 Trustees report projected that, under intermediate assumptions, the HI trust fund would
become insolvent in 2020, one year later than projected in 2004. The revision reflected slightly
higher income and slightly lower costs in 2004 than previously estimated. The 2006 report moved
the insolvency date forward again; under the Trustees’ intermediate assumptions, the HI trust fund
would become insolvent in 2018. The revision reflected expectations of slightly higher costs and
increased utilization of HI services.
Both the 2007 and 2008 reports projected a 2019 insolvency date, though the 2008 report
indicated it would occur earlier in the year. The 2009 report moved the insolvency date forward to
2017, due primarily to the economic recession.
The 2010 Medicare Trustees report,12 issued subsequent to the enactment of ACA, estimated that
the combination of lower Part A costs13 and higher payroll tax revenues expected as a result of the
ACA would postpone the depletion of HI trust fund assets until 2029, 12 years later than the date
projected in their 2009 report. Although the Medicare Trustees noted that the financial outlook for
the Medicare program appeared to have improved as a result of ACA, they cautioned that the
projections in the report were more uncertain than normal, due to the potential for some of the
expenditure reductions not to materialize. As such, the actuaries of the Centers for Medicare &
Medicaid Services (CMS) issued a supplemental memorandum that explained and quantified the

11 The Part D outpatient prescription drug program, which was created by MMA, is funded under SMI; the increased
expenditures associated with this new benefit therefore had little impact on projections of Medicare (HI) solvency.
12 2010 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical
Insurance Trust Funds, August 5, 2010, https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-
and-Reports/ReportsTrustFunds/downloads//tr2010.pdf.
13 The expected reductions were primarily due to productivity adjustments to Part A provider payment updates and
reduced payments to Medicare Advantage plans.
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potentially higher costs than those estimated in the 2010 Trustees report.14 This “illustrative
alternative” projected that the HI trust fund would become insolvent in 2028, one year earlier than
that projected in the 2010 Trustees report.
The 2011 Report of the Medicare Trustees15 projected that the HI trust fund would become
insolvent in 2024, five years earlier than projected in the 2010 report. The worsening financial
outlook was primarily due to lower than expected payroll taxes stemming from higher than
expected unemployment and slow growth in wages in 2010. The “illustrative alternative” also
projected that the HI trust fund would become insolvent in 2024, although earlier in the year.16
The 2012 Trustees Report17 projected that the HI trust fund would become insolvent in 2024, the
same year as estimated in the 2011 report. While the Trustees expected that income from payroll
taxes would increase at a faster rate than expenditures through 2018 due to the projected
economic recovery, the application of an additional 0.9% HI payroll tax for high-income workers
beginning in 2013, and the 2% reduction in spending required by the Budget Control Act of 2011
(BCA, P.L. 112-25) from 2013 through 2021,18 income was still expected to be insufficient to
cover projected HI expenses during that period. The “illustrative alternative” also projected that
the HI trust fund would become insolvent in 2024, although earlier in the year.19
Current Insolvency Projections
In their 2013 report, the Trustees project a somewhat better short-term outlook for the HI trust
fund, and have therefore moved the insolvency date two years later than their 2012 estimate, to
2026 (from 2024 in the prior report). The 2013 Trustees report projects that in the short term,
expenditures will continue to exceed income through 2014, and beginning in 2015 through 2020,
the fund will run a slight surplus. Beyond 2020, expenditure growth is expected to again outpace
growth in income. Trust fund assets will be used to make up the difference between income and
expenditures, until the assets are depleted in 2026. (See Figure 2.)

14 Memo from John D. Shatto and M. Kent Clemens, “Projected Medicare Expenditures Under an Illustrative Scenario
with Alternative Payment Updates to Medicare Providers,” August 5, 2010, http://www.cms.gov/Research-Statistics-
Data-and-Systems/Statistics-Trends-and-Reports/ReportsTrustFunds/downloads//2010TRAlternativeScenario.pdf.
15 2011 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical
Insurance Trust Funds, May 13, 2011, https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-
and-Reports/ReportsTrustFunds/downloads//tr2011.pdf.
16 Memo from John D. Shatto and M. Kent Clemens, “Projected Medicare Expenditures Under an Illustrative Scenario
with Alternative Payment Updates to Medicare Providers,” May 13, 2011, http://www.cms.gov/Research-Statistics-
Data-and-Systems/Research/ActuarialStudies/downloads//2011TRAlternativeScenario.pdf.
17 2012 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical
Insurance Trust Funds, https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/
ReportsTrustFunds/downloads//tr2012.pdf.
18 For additional information on BCA and required spending reductions, see CRS Report R41965, The Budget Control
Act of 2011, by Bill Heniff Jr., Elizabeth Rybicki, and Shannon M. Mahan; and CRS Report R42050, Budget
“Sequestration” and Selected Program Exemptions and Special Rules, coordinated by Karen Spar.
19 Memo from John D. Shatto and M. Kent Clemens, CMS Office of the Actuary, “Projected Medicare Expenditures
Under Illustrative Scenarios with Alternative Payment Updates to Medicare Providers,” May 18, 2012,
http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/ReportsTrustFunds/
Downloads/2012TRAlternativeScenario.pdf.
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Similar to years 2010 through 2012, the CMS actuaries issued an illustrative alternative scenario
that assumed that certain ACA changes that reduce Part A provider reimbursements would be
made through 2019, and then gradually phased out starting in 2020.20 Because the impact of these
changes is expected to be relatively minor in the short term, the estimated trust fund exhaustion
date provided in this scenario is the same as that under the current law scenario, 2026; however,
the trust fund is expected to be depleted somewhat earlier in the year under the alternative
scenario.
Figure 2. HI Trust Fund Assets at Beginning of Year
as a Percentage of Annual Expenditures
Estimates from 2009, 2010, 2011, 2012, and 2013 Trustees Reports
1.5
2009 Estimates
1.3
2010 Estimates
2011 Estimates
1.1
2012 Estimates
0.9
2013 Estimates
0.7
0.5
0.3
0.1
-0.1

Sources: Data from the 2009 Medicare Trustees Report, Table II.E1, and Summaries of the 2010, 2011, 2012,
and 2013 Annual Reports of the Social Security and Medicare Boards of Trustees, Chart D (2010 and 2011) and
Chart E (2012 and 2013).
What Would Happen If the Fund Became Insolvent?
The practical function of the HI trust fund is that it permits the continued payment of bills in the
event of a temporary financial strain (e.g., lower income or higher costs than expected) without
requiring legislative action. As long as the HI trust fund has a balance (i.e., there are securities
credited to the fund), the Treasury Department is authorized to make payments for Medicare
Part A services. If the trust fund is not able to pay all of current expenses out of current income
and accumulated trust fund assets, it is considered to be insolvent.21

20 Memo from John D. Shatto and M. Kent Clemens, “Projected Medicare Expenditures under Illustrative Scenarios
with Alternative Payment Updates to Medicare Providers,” May 31, 2013, http://www.cms.gov/Research-Statistics-
Data-and-Systems/Statistics-Trends-and-Reports/ReportsTrustFunds/Downloads/2013TRAlternativeScenario.pdf.
21 From time to time, it is reported that Medicare is on the verge of “bankruptcy,” however, in the context of federal
(continued...)
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To date, the HI trust fund has never become insolvent, and there are no provisions in the Social
Security Act that govern what would happen if that were to occur. For example, there is no
authority in law for the program to use general revenue to fund Part A services in the event of
such a shortfall.
In their 2013 report, the Medicare Trustees project that the HI trust fund will be exhausted in
2026. At that time, HI would continue to receive tax income from which some benefits could be
paid; however, funds would only be sufficient to pay for 87% of Part A expenses. Unless action is
taken prior to that date to increase revenues or decrease expenditures (or some combination of the
two), Congress may face a legislative decision regarding whether, and/or how, to provide for
another source of funding (e.g., general revenues) to make up for these deficits.
Financing Issues
Much of the concern about the financial status of Medicare tends to focus on the HI trust fund
date of insolvency when Medicare no longer has the authority to pay for Part A health care
services in full. This focus can, however, detract from the larger issues confronting the Medicare
program as a whole, and its current and future impact on the federal budget and on taxpayers.
When viewed from the perspective of the entire federal budget, as the number of beneficiaries
and per capita health care costs continue to grow, total Medicare spending obligations (HI and
SMI spending combined) are expected to place increasing demands on federal budgetary
resources. For example, changes to the physician sustainable growth rate (SGR) payment system
to prevent scheduled cuts in Medicare payments to doctors beginning in 2014 would require
significant additional federal funding. However, because payments to physicians are made
through the SMI trust fund, which is funded through premiums and general revenues, these
additional expenditures would have little to no effect on estimates of Medicare solvency (which
reflects only expected HI trust fund spending).

(...continued)
trust funds, this term is not meaningful. It is true that a trust fund’s outgo can be greater than its income and trust funds
can have a zero balance, but, unlike private businesses, the federal government is not in danger of “going out of
business” or having its assets seized by creditors. As noted, Congress has often taken actions to increase a trust fund’s
revenues or reduce its outgo when the Medicare HI trust fund has faced imminent insolvency.
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Appendix A. Operation of the Hospital Insurance
Trust Fund
Beginning in 2004, expenditures began exceeding tax income (from payroll taxes and from the
taxation of Social Security benefits). Expenditures began to exceed total income (tax income plus
all other sources of revenue) in 2008, and HI assets (the balance of the HI trust fund at the
beginning of the year) were used to meet the portion of expenditures that exceeded income.
Expenditures have exceeded income every year since then and are expected to continue doing so
through 2014. Although the trust fund is projected to run a small surplus in years 2015 through
2020, after that time expenditures are expected to again exceed income, with trust fund assets
making up the difference until the asset balance is depleted in 2026. At that time, the trust fund
will no longer have sufficient funds to allow for the full payment of Part A expenditures (see
Table A-1 below for historical and projected Medicare financial data through 2022).
Table A-1. Operation of the Hospital Insurance Trust Fund,
Calendar Years 1970-2022
($ in billions)
Income
Expenditures
Trust Fund
Interest,
Payroll
Transfers,
Benefit
Admin.
Net
Balance at
Year
Taxes
Othera Total
Payments
Expenses Total Change
End of Year
Historical Data
1970 $4.9 $1.2 $6.0 $5.1 $0.2 $5.3 $0.7 $3.2
1975 11.5 1.4 13.0 11.3 0.3 11.6 1.4 10.5
1980 23.8 2.1 26.1 25.1 0.5 25.6 0.5 13.7
1985 47.6 3.9 51.4 47.6 0.8 48.4 4.8 20.5
1990 72.0 8.4 80.4 66.2 0.8 67.0 13.4 98.9
1995 98.4 16.7 115.0 116.4 1.2 117.6 -2.6 130.3
2000 144.4 22.9 167.2 128.5 2.6 131.1 36.1 177.5
2001 152.0 22.7 174.6 141.2 2.2 143.4 31.3 208.7
2002 152.7 25.8 178.6 149.9 2.6 152.5 26.1 234.8
2003 149.2 26.5 175.8 152.1 2.5 154.6 21.2 256.0
2004 156.5 27.5 183.9 167.6 3.0 170.6 13.3 269.3
2005 171.4 28 199.4 180.0 2.9 182.9 16.4 285.8
2006 181.3 30.2 211.5 189.0 2.9 191.9 19.6 305.4
2007 191.9 31.9 223.7 200.2 2.9 203.1 20.7 326.0
2008 198.7 32 230.8 232.3 3.3 235.6 -4.7 321.3
2009 190.9 34.5 225.4 239.3 3.2 242.5 -17.1 304.2
2010 182.0 33.6 215.6 244.5 3.5 247.9 -32.3 271.9
2011 195.6 33.4 228.9 252.9 3.8 256.7 -27.7 244.2
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Income
Expenditures
Trust Fund
Interest,
Payroll
Transfers,
Benefit
Admin.
Net
Balance at
Year
Taxes
Othera Total
Payments
Expenses Total Change
End of Year
2012 205.7 37.3 243.0 262.9 3.9 266.8 -23.8 220.4
Intermediate Estimate
2013 216.5 31.8 248.2 266.6 3.9 270.5 -22.2 198.1
2014 230.4 34.6 265.1 271.1 4.2 275.2 -10.2 188.0
2015 248.4 38.0 286.4 279.0 4.6 283.6 2.8 190.8
2016 266.5 41.7 308.2 296.2 5.1 301.3 6.9 197.7
2017 284.9 45.5 330.4 314.8 5.7 320.5 9.9 207.6
2018 303.2 49.6 352.8 339.3 6.2 345.5 7.3 214.9
2019 319.7 54.7 374.3 361.2 6.7 367.9 6.4 221.3
2020 335.5 58.5 393.9 386.4 7.2 393.6 0.3 221.6
2021 352.0 63.2 415.1 414.0 7.7 421.8 -6.7 215.0
2022 368.4 66.2 434.6 449.2 8.5 457.7 -23.1 191.8
Source: 2013 Medicare Trustees Report, Table III.B4.
Notes: Sums may not equal totals due to rounding.
a. Includes income from the taxation of Social Security benefits, Railroad Retirement account transfers,
premiums paid by voluntary enrollees, and interest.

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Appendix B. Historical Payroll Tax Rates
Table B-1. Tax Rates and Maximum Tax Bases
Tax rate (percentage of taxable earnings)
Employees and
Calendar Year
Maximum tax base
employers, each
Self-employed
Past experience



1966
$6,600
0.35%
0.35%
1967 6,600
0.50
0.50
1968-71 7,800
0.60
0.60
1972 9,000
0.60
0.60
1973 10,800
1.00
1.00
1974 13,200
0.90
0.90
1975 14,100
0.90
0.90
1976 15,300
0.90
0.90
1977 16,500
0.90
0.90
1978 17,700
1.00
1.00
1979 22,900
1.05
1.05
1980 25,900
1.05
1.05
1981 29,700
1.30
1.30
1982 32,400
1.30
1.30
1983 35,700
1.30
1.30
1984 37,800
1.30
2.60
1985 39,600
1.35
2.70
1986 42,000
1.45
2.90
1987 43,800
1.45
2.90
1988 45,000
1.45
2.90
1989 48,000
1.45
2.90
1990 51,300
1.45
2.90
1991 125,000
1.45
2.90
1992 130,200
1.45
2.90
1993 135,000
1.45
2.90
1994-2012 no
limit
1.45 2.90
Scheduled in current law



2013 and later
no limit
1.45
2.90
Source: 2013 Report of the Medicare Trustees, Table III.B2.
Notes: Beginning in 2013, workers pay an additional 0.9% of their earnings above $200,000 (those who file
individual tax returns) or $250,000 (those who file joint tax returns).
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Author Contact Information

Patricia A. Davis

Specialist in Health Care Financing
pdavis@crs.loc.gov, 7-7362


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