Medicare has been making headlines lately, from the projected depletion of the Hospital Insurance trust fund to calls for full privatization. We talked to an expert to sort through all the noise.

Feeling uneasy about the future of Medicare, the federal program that provides health insurance to almost 90% of U.S. adults ages 65 years and older? You’re not alone.

A January 2025 survey by KFF found that 81% of respondents were either “very worried” or “somewhat worried” that future Medicare enrollees won’t receive the same level of coverage as current enrollees. This view was held by 81% of respondents currently enrolled in Medicare and 88% of adults ages 50 to 64 who would become eligible for Medicare in the near future.

To address the concerns, we brought some of the most pressing questions about Medicare’s future to Isabelle Phan, PharmD, who has a background in conducting utilization management reviews and handles appeals for Medicare Part D plans.

Read Dr. Phan’s responses below.

You may have heard people say that Medicare is “going broke,” but that’s not exactly true. Two main trust funds fund Medicare. Though one of them is facing financial challenges, it doesn’t mean the program will disappear.

The Hospital Insurance trust fund

The Hospital Insurance (HI) trust fund covers Medicare Part A and is largely funded by payroll taxes.

Current estimates suggest that this fund could be depleted by 2036. However, even if that happens, Medicare wouldn’t suddenly stop. There would still be enough funding to cover about 89% of hospital costs.

Plus, Congress could take action to close the gap, which it has done in the past.

The Supplementary Medical Insurance trust fund

The Supplementary Medical Insurance (SMI) trust fund, which funds Part B (doctor’s visits) and Part D (prescription drugs), works differently.

It’s funded by a combination of general revenue and premiums paid by beneficiaries, which are adjusted each year to match expected costs. That means it won’t run out of money the way the HI trust fund could.

Privatizing Medicare means shifting more control from the government to private insurance companies, involving them in greater responsibility for managing coverage, costs, and care.

In some ways, a form of privatization already exists through Medicare Advantage (Part C).

Medicare Advantage is an alternative to Original Medicare (Part A and Part B) that allows beneficiaries to enroll in plans administered by Medicare-approved private insurers. These plans may offer extra benefits like dental and vision coverage, but they may also have more complex cost structures and limited provider networks.

Although the government funds Medicare Advantage plans, private insurers handle care coordination and payments.

If Medicare were fully privatized, private insurers would have more control over pricing, coverage rules, and eligibility requirements, with reduced government oversight.

This could lead to more choices and competition among plans, which might lower some costs. However, some argue that reduced regulation could mean higher out-of-pocket expenses, particularly for people with complex medical needs.

Yes, Medicare costs are expected to keep rising due to several factors that lead to higher Medicare spending. As Medicare spending increases, so do beneficiaries’ out-of-pocket costs.

Growth of eligible population

The population of U.S. adults who are eligible for Medicare continues to grow, which increases overall spending by Medicare.

The trend of increasing Medicare costs is expected to continue as more baby boomers (those born between 1946 and 1965) become eligible each year.

Healthcare costs

According to a 2024 KFF report, advances in medical technology, the increased use of healthcare, and higher service prices all play a role in driving up costs.

The same report also notes that Medicare Advantage plans have seen significant growth, with spending on these plans nearly tripling over the past decade due to higher enrollment and per-person costs.

Some proposals suggest expanding Medicare coverage to include additional benefits. But this can also increase costs.

For example, there’s currently a proposal to expand Medicare coverage of antiobesity medications, glucagon-like peptide-1 (GLP-1) receptor agonists like Wegovy and Zepbound. This expanded coverage would cost nearly $25 billion over the next decade.

While rising costs are a challenge, Medicare is constantly evolving. Lawmakers are continually seeking ways to balance funding with sustainability to ensure the program continues functioning.

While overall healthcare costs continue to rise, prescription drug costs for Medicare beneficiaries have decreased due to the Inflation Reduction Act (IRA), passed in 2022.

The IRA has several provisions related to drug costs, including:

  • allowing Medicare to negotiate prices on some of the most expensive drugs
  • adding a $2,000 cap on out-of-pocket prescription drug costs
  • establishing a $35 monthly cap on insulin costs

There’s currently a bill in Congress to repeal the IRA. The Brookings Institution, a nonpartisan public policy organization, notes that clean energy provisions would probably be the most likely target of any repeal efforts.

It’s worth noting that there’s growing bipartisan support for lowering drug costs, especially when it comes to out-of-pocket costs. KFF research from 2024 notes that the majority of voters across the political spectrum support expanding the caps on insulin and out-of-pocket drug costs beyond Medicare beneficiaries.

Given the widespread support for lower drug costs, it’s unlikely that these provisions will be completely repealed without any kind of replacement legislation.

It’s unclear what Medicare will look like in the future, but one thing is clear: It’s not going away any time soon.

While costs are expected to continue rising, reigning in out-of-pocket costs, especially for prescription drugs, continues to have widespread bipartisan support among voters. That means healthcare costs will likely continue to be a priority for representatives at the state and federal levels.