Medicare Hospital Insurance trust fund projected by Trustees to exhaust reserves, cutting hospital payments by 12%

The 2025 Medicare Trustees Report projects the Hospital Insurance trust fund — which pays for inpatient hospital care, skilled nursing, home health, and hospice under Medicare Part A — will be depleted in 2033, three years earlier than the previous estimate. CBO's February 2026 projection is somewhat less dire, estimating exhaustion around 2040, but attributes the 12-year acceleration from its prior estimate to reduced trust fund revenue from the One Big Beautiful Bill Act's senior deduction provision and higher-than-expected per-enrollee spending. Upon exhaustion, Medicare Part A payments to hospitals and providers would be immediately cut to match incoming payroll tax revenue — a reduction of roughly 12%. Congress has never allowed the Medicare Hospital Insurance fund to run dry, but has also enacted no structural reform to prevent it.