Medicare Financial Status, Budget Impact, and Sustainability—Which Concept is Which?

Medicare is continually undergoingchange, as it must in order to reflect advancesin medical technology, new health caredelivery systems, financial pressures, andother developments. Modifications to theprogram are debated by policymakers inCongress and the administration, togetherwith academic experts and others. Thesedebates would be improved if policymakersand the public had a clearer understandingof Medicare and certain commonlycited views of the program’s overall status.Three such concepts—the financial statusof the Medicare trust funds, the impact ofMedicare on the Federal budget, and thelong-run sustainability of Medicare—areoften confused with each other and are sometimesused interchangeably. Each concept isimportant but needs to be used for its ownpurpose. This article clarifies the differencesamong these three views of Medicare andprovides examples of each.