Medicare began dipping into its “trust fund” this year. The Medicare system’s actuaries have warned that the system will be insolvent, i.e. the funds paid in the form of Medicare taxes over the years that have exceed the amount spent in Medicare reimbursements, will be completely depleted in 2026 somewhat earlier than had been anticipated. What happens then?
One thing that could happen is that payments to providers could be delayed, even greatly delayed. Presently for every “clean” claim filed an 835 remittance response is received in about two weeks and the 835 and actual payment are, at least in theory, concurrent. Increased delays could be disastrous for providers since they depend on them so highly.
I think it’s pretty likely that the federal government will continue to pay claims even after the notional trust fund is depleted. SSRI is more problematic. If Medicare claims continue to be paid, the federal government’s issuance of credit to itself will skyrocket. We don’t really know what the implications of that might be. Nothing might happen or it might be catastrophic.
The federal situation is similar to Illinois’. The feds will fully fund both Social Security and Medicare out of general revenues. There will also be an increase in the Social Security and Medicare taxes. As the population ages, the total cost of both funds will rise substantially.
There will have to be cuts in other programs. Defense, at about $1 T per year will be cut sharply. We will have to withdraw our forces from overseas, and our alliance commitments will be reduced or eliminated. Goodbye Pax Americana. We will learn what a Pax Sinae means.
You’re overestimating defense appropriations a bit. For 2018 it was about $660 billion.