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
OBBBA Would Accelerate Social Security & Medicare Insolvency
The Social Security and Medicare Trustees estimated in their 2025 annual reports on the programs that the retirement and hospital trust funds will...
Analysis of the 2025 Medicare Trustees' Report
The Medicare and Social Security Trustees released their annual reports on the financial status of the trust funds. Our report on the Social Security...
Social Security and Medicare Trustees Release 2025 Reports
Note: We have published our analyses of the Social Security and Medicare Trustees' Reports. The Social Security and Medicare Trustees released their...
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.