Medicare has been operating in the red since 2008 and SS since 2010, i.e., benefits exceed revenue. The Medicare Trust Fund consists of non-market, interest bearing T-bills. Shortfalls between revenue and benefits are funded by cashing in the T-bills. The Medicare Trust Fund will be exhausted by 2026. By law, benefits will reduced to the amount of revenue.
40% of all Medicare expenditures already come from the General Fund. The premiums for Medicare Part B only cover 25% of the costs, by law. The other 75% comes from the General Fund. As a result, the costs of Medicare will continue to consume more and more of the federal budget as the population ages.
The "IOUs" in the Medicare Trust Fund are really no different than the T-bills held by China, Japan, etc. The Medicare and SS Trust Funds are included in our $20 trillion national debt.
If the notion that Medicare recipients are simply "getting back what they paid in" is false then where is the money coming from? Simply, the excess received is being borrowed from younger generations and the cost is more than we can bear.
This hulking mass of debt, which is largely attributed to Medicare, is by far the largest burden to future generation and greatly threatens our economic and societal well-being. Worse, the government's old age assistance programs are nearly defunct. Each May, the Social Security and Medicare Board of Trustees publishes their report on the financial state of their programs. These latest figures are not surprising. They are roughly the same every year. Medicare and SS are heading over the cliff. They must be reformed by reducing benefits or increasing taxes or some combination thereof. They are unsustainable as currently structured.