A moving target: financing Medicare for the future

Since 1997, there has been a steady downward trend in projected Medicare spending as a share of the gross domestic product (GDP), substantially improving the long-run outlook for Medicare. But even with improvements in outlook, the required share of GDP will rise by more than 70%, and the question remains as to who will pay for Medicare in the future. This report examines a limited set of tax options and a flat beneficiary premium to illustrate the size of contributions necessary to achieve several different goals, and to explore the difference that multiple years of projections can make on these requirements.