Revenue Sources

• Medicare has two trust funds--the Hospital Insurance Fund, and the Supplemental Medical Insurance Fund which contains separate accounts for Medicare Part B Medical Insurance and Medicare Part D, Prescription Drug Plan. The Part D account receives financing from premiums paid by Medicare beneficiaries and states that pay premiums for their Medicare-eligible Medicaid recipients. The main financing source is federal general revenues.
  
  

Revenue Amounts

• The Part D account received $49.4 billion income in 2008. Premiums paid by beneficiaries provided $5 billion; state-paid premiums amounted to $7.1 billion. Remaining funds needed to finance 2008 expenditures of $49.3 came from federal general revenues--$37.3 billion. Financing is "dedicated" meaning that premium and federal transfer increases are mandated by law, ensuring Part D always receives necessary financing.
  
  

Projected Financing

• The Boards of Trustees of the Medicare Trust Funds project the Medicare Part D account's income from premiums will increase from $7.2 billion in 2010 to $17.7 billion in 2018. State premiums payments will rise from $8.3 to $15.4 billion. Federal general revenue transfers needed to finance expenditures will grow from $50.7 to $107.8 billion.