The Medicare Payment Advisory Commission recently released its 2012 annual health spending report. If left unchanged, Medicare spending is projected to increase from today’s 3.7 percent of gross domestic product to 6 percent in 2040.
Medicare’s current fee-for-service structure has created inefficiencies and huge financial challenges. By 2024, the program will be entirely bankrupt — five years earlier than projected in 2010. In the next 75 years, Medicare faces unfunded liabilities of up to $36 trillion. And given political uncertainties, Medicare’s chief actuary has warned that future costs could be substantially larger than estimated.
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