The Countdown
Our major federal trust funds are approaching insolvency.
What is the Medicare Hospital Insurance Trust Fund?
Medicare, a federal health insurance program, provides coverage primarily to people aged 65 and older. Its Hospital Insurance trust fund finances just Medicare Part A, which covers inpatient care in hospitals. Its revenue comes primarily from a 2.9% payroll tax, paid equally by workers and employers.
Medicare Part B, which covers outpatient care, and Medicare Part D, which covers prescription drugs, are financed through a different federal trust fund funded mainly by beneficiary premiums and general revenue from the federal government. Though their costs are high and rising, they don’t face the same type of solvency challenges.
Why is it in trouble?
Health care costs are rising, and the population is aging. This means more people are becoming eligible for Medicare, their benefits are becoming more costly, and there are less people in the workforce paying the taxes that support those benefits.
What can we do to ensure Medicare trust fund solvency?
We need to reduce health care costs, change benefit design, increase payroll tax revenue and/or identify new sources of revenue for the trust fund.
Get Into the Weeds
CBO’s Medicare Savings Options
As health care costs rise and the population continues to age, the gap between Medicare costs and revenue collections is continuing to grow. Without action, Medicare payments from the trust fund would be significantly reduced or delayed, leading to a potential loss of access to care for enrollees.
Using CBO's most recent budget options for Medicare, we identify potential savings and their effects on the HI trust fund. These options are meant to serve as illustrative examples and, in most cases, represent relatively ambitious versions of policies that could be scaled up or down in a variety of ways.
A Deeper Dive
Event Recap: Checking in on the Social Security & Medicare Trust Funds
On June 10, the Committee for a Responsible Federal Budget hosted an online webinar, Checking in on the Social Security & Medicare Trust Funds. The...
Analysis of the 2026 Medicare Trustees' Report
The Medicare and Social Security Trustees released their annual reports on the financial status of the trust funds, showing both face serious...
Social Security and Medicare Trustees Release 2026 Reports
The Social Security and Medicare Trustees released their annual reports today, finding that both programs have significantly worse financial outlooks...
The Next Doc Fix is Coming
Congress has now kicked off this year’s “Doc Fix” process, an increasingly annual occurrence where they provide ad-hoc pay increases to physicians...
Ways & Means Zeroes in on Hospital Costs
Last week, the Committee on Ways and Means held a hearing on the high cost of hospital care with leaders of various health systems. Over the course of...
CMS Abandons Efforts to Rein in Medicare Costs
After proposing meaningful reforms to reduce Medicare Advantage (MA) overpayments in January, the Centers for Medicare & Medicaid Services (CMS)...
What Can I do?
Reach Out to Congress
We need Congress to fix these tough issues before our seniors, our economy, and future generations are in jeopardy. Find your representative and share your concerns.