Medicare spending projected to surge, outpace economic growth
By HME News Staff
Updated 9:02 AM CDT, Mon June 23, 2025
WASHINGTON – Medicare expenditures are projected to grow significantly faster than both aggregate worker earnings and the overall U.S. economy, according to the 2025 Annual Report from the Boards of Trustees of the Federal Hospital Insurance (HI) and Federal Supplementary Medical Insurance (SMI) Trust Funds.
Key findings from the 2025 Medicare Trustees Report
- Medicare spending as a share of GDP is expected to rise from 3.8% in 2024 to 6.7% by 2099.
- Under an alternative scenario with higher healthcare cost growth, Medicare could consume up to 8.8% of GDP by 2099.
- This growth trajectory poses a serious challenge to Medicare’s financial sustainability, the federal budget, and economic stability.
“The projections in this report show that change is needed to address Medicare’s financial challenges,” the trustees stated. “The sooner solutions are enacted, the more flexible and gradual they can be.”
Financial outlook for Medicare Trust Funds
- The HI Trust Fund is projected to run a deficit starting in 2027, failing both short-term and long-term financial adequacy tests.
- The SMI Trust Fund (covering Medicare Part B and Part D) is expected to remain solvent due to annual adjustments in premiums and government contributions. However, these adjustments will need to outpace economic growth to meet rising costs.
Medicare expenditures in 2024
In 2024, total Medicare expenditures reached $1.12 trillion, underscoring the scale of the program and the urgency of reform.
Read the 267-page report here.
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