Should the trust fund be emptied out, the trustees predict that hospital benefits would have to be cut by 10%. But those cuts are widely considered to be politically unacceptable, as illustrated by statements from Biden and his predecessor, former President Donald Trump.

In addition to proposing an increase in the tax levied on the investment earnings of high-income Americans, Biden also proposes that these revenues be fully dedicated to the trust fund. Currently the government treats that money as general revenue that can be used for any government program.

Unlike Medicare Part A, Parts B and D are funded largely by general federal revenue and by premiums paid by retirees.

Because the government is allowed to use general revenue to pay for them, the funding of Parts B and D isn’t jeopardized by the depletion of their trust fund – no matter how fast those costs rise.

Even without Biden’s proposed changes, official Medicare spending projections rise rapidly through the mid-2030s and then plateau as a percentage of gross domestic product.

However, those projections are based on a presumption that payments to hospitals are constrained as specified in the Affordable Care Act and that other spending constraints on physician payments are realized.

Unfortunately, history provides little assurance that lawmakers will maintain all of these requirements to restrain future payments to health care providers.

We say this because of what happened after 1997, when Congress approved the sustainable growth rate system, which was intended to limit the annual increase in cost per Medicare beneficiary to the rate of economic growth. Starting in 2002, Congress passed legislation year after year to override it – and only stopped doing that once it did away with the system altogether in 2015.

Reflecting this uncertainty, the annual trustees report features an alternative projection that is arguably more credible and more scary. It indicates that Medicare costs will grow much faster than the economy starting in 2036.

The Social Security program, a national pension program that primarily supports older Americans, faces similar funding shortfalls.

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