The Congressional Budget Office said Feb. 23 that Medicare’s Hospital Insurance Trust Fund will be exhausted in 2040, 12 years earlier than previously projected.
The trust fund finances Medicare Part A, which covers inpatient hospital services, skilled nursing facility care, home health and hospice.
Spending is projected to outpace income beginning in 2032, according to CBO.
In March 2025, CBO projected the trust fund would remain solvent through 2055. In its updated Feb. 23 blog post, the agency revised that estimate, projecting exhaustion in 2040.
CBO said the updated projection reflects its demographic projections published in January, its 10-year economic and budget projections published Feb. 11 and its long-term budget projections that extend those earlier estimates. The agency noted the estimate does not account for any economic or budgetary effects of the Supreme Court’s Feb. 20 ruling on tariffs.
CBO attributed the change largely to lower projected income to the trust fund. The agency cited reduced revenue from taxing Social Security benefits due to provisions in the 2025 reconciliation act, H.R. 1, as well as lower projected payroll tax revenue and interest income.
The most recent separate projection from the Medicare Board of Trustees estimated the trust fund would be exhausted in 2033.
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