Medicare is a health insurance program that covers over 57 million Americans including the aged and young ones with disabilities. Medicare is always at the center of federal health budgets and policy. Obama’s introduction of the Affordable Care Act expanded coverage of health insurance creating room for huge adjustment to Medicare programs, policies and budget. Projections for Medicare spending are an essential practice given the growing federal budget deficit.

It is currently estimated that Medicare will have enough funds to pay for insurance benefits until the year 2028. The population of people aged 65 and above is projected to double to 84 million up from 40 million between the years 2010 and 200. By the year 2050, the number of people aged 80 and above is expected to triple to 31 million while those between 90 and 100 will quadruple to 8 million. Since Medicare spending increases with increase in the number of the aged and those above the age of 80 contribute to a significant amount of Medicare spending, a lot more pressure will be exerted on per capita Medicare expenses. Figures indicate that the aging population has increased over time leading to a corresponding increase in the cost of health care services. As a result, Medicare spending has also been improved. Medicare spending is projected to be at 56 million USD in 2020, 72.8 million USD by 2030, and 79.7 million USD by 2040 and 83.7 million USD by 2050.

CBO reported that repealing the Affordable Care Act would increase Medicare spending by up to 802 billion USD in the next ten years. Affordable Care Act reduces payments for its beneficiaries and repealing it implies that more expenditure would be made to cover up. Increased Medicare spending would trigger a corresponding rise in premiums, beneficiaries, cost sharing, and deductibles. Eventually, the date of insolvency for Medicare trust fund would be accelerated. In 2016, 588 billion USD Medicare spending contributed to 15% of the total federal budget. From 2016 to 2030, this percentage (forming part of the federal budget), is projected to increase. In 2027, Medicare spending will rest at 18% of the federal budget. Between the years 2017 and 2027, the net spending on Medicare is expected to double to 1.2 trillion USD up from 592 billion USD. Comparatively, Medicare spending between 2015 and 2025 is projected to be higher than that between 2010 and 2015. Considering the per capita calculation, the growth of Medicare spending is expected to grow by 4.3% annually between the years 2012 and 2025. This annual growth is recorded higher than that between 2010 and 2015.

Medicare program is faced by the challenge of increased expenditure on prescription drugs. Part D prescription drugs are projected to record the highest per capita growth rate compared to other parts of prescription drugs. Per capita growth for part D is projected at 5.8% as opposed to the one for Part A projected at 3.2% with the inclusion of hospital benefits. The heightened rate of growth for Part D prescription drugs occurs as a result of the expensive nature of specialty drugs associated with the group. In 2015, the spending on part D prescription drugs was 2,203 USD and was projected to rise to 3,861 USD by 2025. The second highest projected growth is that of Part B drugs which is at 4.6%. In the year 2015, the spending was 5,522 USD per beneficiary and is expected to be 8,642 USD per beneficiary in 2025.

The net Medicare spending is set to increase to 5.7% of GDP in 2046 from 3.2% in 2016. Before the introduction of the Affordable Care Act the projected growth of Medicare spending was expected to be 8.5% of GDP by 2046. After the introduction of the Affordable Care Act, there were moderations on long term spending projections as a share of the economy. Part A of Medicare receives funding from taxes on payrolls while part B benefits and Part D prescription drugs are funded generally through revenues and premiums collected from beneficiaries. Since revenue budgets for part D and part B are pre-set before the beginning of every financial year, there are usually no shortfalls in the trust funds for parts B and D in the following months. However, because it is expected that there will be higher expenses for part D and B concerning their benefits, there will be a corresponding increase in beneficiary programs and revenue funding which are needed to cater for the costs of part B and D in the future.

In conclusion, the financial status of Medicare has improved since the introduction of the Affordable Care Act in the year 2010. If the Affordable Care Act is repealed especially sections concerning Medicare, there would be an increase in Medicare spending making it strenuous for it to serve the people it ought to help effectively. However, Medicare still faces financial pressures from the aging population and increased the cost of health care. To succeed with the program, policymakers should consider modifications on revenues, general spending and associated benefits.