Unlocking the Future of Medicare: What You Need to Know Now

Medicare remains a hot topic, sparking debates from concerns over the Hospital Insurance trust fund’s sustainability to discussions about privatization. To cut through the confusion, we consulted with a healthcare expert for clear answers.

If you’re worried about Medicare’s future—the federal health insurance program covering nearly 90% of U.S. adults aged 65 and older—you’re in good company.

A January 2025 KFF survey revealed that 81% of respondents expressed worry that future Medicare beneficiaries may not enjoy the same coverage benefits as today’s enrollees. This concern spans 81% of current Medicare participants and 88% of adults aged 50 to 64 who will soon qualify.

To clarify these concerns, we spoke with Dr. Isabelle Phan, PharmD, an expert in Medicare Part D appeals and utilization management reviews.

Here are Dr. Phan’s insights:

Is Medicare Really "Going Broke"? What Does That Mean?

Claims about Medicare "going broke" are often misunderstood. Medicare is funded by two main trust funds, each with different financial outlooks.

The Hospital Insurance Trust Fund

This fund supports Medicare Part A (hospital coverage) primarily through payroll taxes. Current projections indicate possible depletion by 2036. However, even if depleted, Medicare would still cover about 89% of hospital expenses. Historically, Congress has intervened to address funding gaps.

The Supplementary Medical Insurance Trust Fund

Funding Medicare Parts B and D, this trust fund relies on general revenues and beneficiary premiums, which adjust annually to meet costs. This model prevents it from facing the same depletion risks as the Hospital Insurance fund.

» Learn more: How Medicare is funded

What Does Medicare Privatization Entail?

Privatization means shifting more responsibility from government to private insurers, potentially increasing their role in managing coverage and costs.

Medicare Advantage (Part C) already represents a partial privatization, offering beneficiaries plans through private companies with additional benefits like dental or vision, albeit sometimes with more complex costs and limited networks.

Full privatization would give private insurers greater control over pricing and eligibility, possibly increasing plan options and competition but also raising concerns about higher out-of-pocket costs for those with complex health needs.

» Learn more: Pros and cons of Medicare Advantage plans

Will Medicare Costs Keep Rising?

Yes, Medicare expenses are expected to grow due to several factors, which also impact beneficiary out-of-pocket spending.

Growing Eligible Population

The number of Medicare-eligible adults continues to rise, driven by aging baby boomers, increasing overall program spending.

Healthcare Cost Drivers

Advances in medical technology, increased healthcare utilization, and rising service prices contribute to higher Medicare expenditures. Notably, spending on Medicare Advantage plans has nearly tripled over the past decade.

Proposals to expand Medicare coverage, such as including anti-obesity medications like GLP-1 receptor agonists (e.g., Wegovy, Zepbound), could add nearly $25 billion in costs over the next decade.

Despite rising costs, Medicare continues to evolve with lawmakers seeking sustainable funding solutions to ensure its longevity.

» Learn more: Medicare cost outlook for 2025

What’s Happening with Prescription Drug Costs?

Prescription drug costs for Medicare beneficiaries have decreased thanks to the 2022 Inflation Reduction Act (IRA), which introduced key measures like:

• Medicare’s ability to negotiate prices on high-cost drugs
• A $2,000 cap on out-of-pocket prescription drug expenses
• A $35 monthly cap on insulin costs

While there is legislation proposed to repeal the IRA, broad bipartisan support exists for maintaining or expanding drug cost caps, making a full repeal unlikely without replacement measures.

» Learn more: Changes to Medicare drug costs in 2025

Final Thoughts

The future of Medicare may hold uncertainties, but the program remains a cornerstone of healthcare for millions. Rising costs are a challenge, yet controlling out-of-pocket expenses, especially for medications, enjoys strong bipartisan backing. This focus ensures healthcare affordability will remain a priority for policymakers in the years ahead.

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