Recent policy changes and economic shifts have slashed 12 years off the projected life span of the trust fund that pays for Medicare Part A, according to a newly updated report from the Congressional Budget Office (CBO). The Hospital Insurance (HI) Trust Fund is now slated to be entirely exhausted by 2040, even though the balance generally increases through 2031, as spending will begin to outstrip income in the following year.
This rapid deterioration of Medicare’s financial solvency represents a stark drop from the CBO’s previous estimate, which was published just last year, in March 2025. The dramatically shortened timeline means future retirees could face significant cuts to vital health care services far sooner than previously anticipated. As required by the Deficit Control Act, CBO Director Phillip Swagel noted the projections reflect the assumption benefits would be paid as scheduled even after the HI trust fund was exhausted.
