Skip to Content

Medicare Advantage: Strengthening the Trust Fund for America’s Seniors


Published Nov 27, 2023 • by AHIP

Keeping Medicare Advantage strong is critical for the more than 32 million seniors and people with disabilities who depend on it for their health and financial well-being. However, the solvency of the program is a constant concern, with nonpartisan actuaries sounding the alarm about the sustainability of the program’s finances. As noted in a recent Wall Street Journal editorial, new research found that the Medicare Part A Trust Fund could be extended by as much as 17 years if Part A services in the original Medicare program were used at the same level as Medicare Advantage.

The editorial explains the popularity of Medicare Advantage among Medicare-eligible Americans, with more than half choosing Medicare Advantage plans.

“Lower premiums have made Advantage plans popular in particular among low-income seniors. Plans are able to offer more benefits at lower cost in part by reducing unnecessary care and expensive hospital stays.”

It also highlights the drivers behind spending in the Medicare program.

“Hospitals are the biggest driver of Medicare spending. The Centers for Medicare and Medicaid Services (CMS) has tried to use performance-based payment models such as accountable care organizations (ACOs) to improve preventative care and reduce hospital admissions. But these haven’t moved the dial as much as Medicare Advantage plans.”

Medicare is paid for through two trust fund accounts held by the U.S. Treasury. These funds can only be used for Medicare. The editorial notes the research findings around the Part A Trust fund.

“…the Medicare Board of Trustees estimated this year that the program’s hospital trust fund—financed by payroll taxes—would run dry by 2031. If fee-for-service utilization rates were similar to those in the Advantage program, Avalere projects that the hospital trust fund would remain solvent until 2048.”

Medicare Advantage delivers on quality, is good for seniors, people with disabilities, and taxpayers—and it is also good for the Medicare Trust Fund. That’s why more than 32 million Americans—more than 50% of people eligible to enroll—choose Medicare Advantage.

Read the full study, commissioned by AHIP and conducted by Avalere, here.

About AHIP

AHIP is the national association whose members provide health care coverage, services, and solutions to hundreds of millions of Americans every day. We are committed to market-based solutions and public-private partnerships that make health care better and coverage more affordable and accessible for everyone.