Mandatory Spending
Function 570 - Medicare
Increase the Premiums Paid for Medicare Part B
CBO periodically issues a compendium of policy options (called Options for Reducing the Deficit) covering a broad range of issues, as well as separate reports that include options for changing federal tax and spending policies in particular areas. This option appears in one of those publications. The options are derived from many sources and reflect a range of possibilities. For each option, CBO presents an estimate of its effects on the budget but makes no recommendations. Inclusion or exclusion of any particular option does not imply an endorsement or rejection by CBO.
Billions of dollars | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | 2033 | 2034 | 2025– | 2025– |
Decrease (-) in the deficit | 0 | -10 | -21 | -34 | -49 | -67 | -72 | -78 | -86 | -93 | -114 | -510 |
This option would take effect in January 2026.
Medicare is a federal health insurance program for people age 65 or older and for younger people with long-term disabilities or end-stage renal disease. Part B of Medicare covers physicians' and other outpatient services, and everyone who chooses to enroll in Medicare Part B is charged a basic premium. That premium is set to cover about 25 percent of expected costs for Part B benefits per enrollee age 65 or older. In calendar year 2025, it is scheduled to be $185 per month. Enrollees with low incomes and few assets can receive subsidies through Medicaid to cover their Part B premium.
This option would increase the basic premium to cover 35 percent of expected costs for Part B benefits. Beginning in calendar year 2026, the basic premium (as a share of expected costs) would increase by 2 percentage points each year until it covered 35 percent of expected costs in 2030, and then it would remain at that percentage.
This option would lead to increased Medicaid spending because the premiums of some Part B enrollees are paid for by that program.