National Taxpayers Union President: 'The clock really is running down' on Medicare

Pete Sepp, president of the National Taxpayers Union, warned that Medicare is approaching insolvency and called for bipartisan reforms to address rising costs and structural inefficiencies during an appearance on the Health Policy Podcast.

“The hidden problem here is that healthcare systems face an even bigger crisis at the federal and state levels in their financing,” Sepp said. “The Medicare Part A trust fund … is projected to go broke … in 2033. That will necessitate an immediate 11% payment cut in Medicare Part A benefits.”

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Sepp said the timeline leaves little room for delay, adding, “This time the clock really is running down on taxpayers and patients here.”

He pointed to a bipartisan proposal in Congress aimed at reducing waste in Medicare Advantage, arguing that the system currently incentivizes insurers to inflate patient diagnoses.

“The average problem here … is something like $40 billion more a year due to this upcoding alone to the Medicare system,” Sepp said. “We can’t afford it. We have got to do something to address it.”

The legislation, known as the No Upcode Act, would require additional verification of diagnoses and more in-person evaluations. Sepp described the reforms as “really simple common sense steps” that would both improve care and reduce costs.

Sepp also warned that broader federal healthcare spending continues to grow despite recent policy changes, noting that Medicaid expenditures are still projected to rise and healthcare already accounts for more than a quarter of federal spending.

Beyond Medicare, he highlighted additional fiscal pressures, including Social Security and the Highway Trust Fund, emphasizing that multiple federal programs are on similar timelines for financial strain.

“It’s no longer something that is well over the horizon,” Sepp said. “It’s a good six years from now, and that’s it.”

Sepp framed the issue as both fiscal and moral, urging policymakers to act before automatic benefit cuts or tax increases become unavoidable.

“Do we want huge cuts in these benefit programs … or tax increases that would be very hard to afford?” he said. “It’s something that is going to be very personal very quickly.”

The National Taxpayers Union, founded in 1969, is a nonprofit organization focused on tax policy, government spending, and economic freedom, with programs ranging from federal budget analysis to state-level fiscal reforms.