Medicare hospital trust fund to run out of money in 2028, trustees say

The Hospital Insurance Trust Fund, which pays for hospital services such as inpatient care, is projected to run out of money in 2028, according to the latest report from the Medicare Trustees. 

The report, released late Thursday, projects the hospital fund will run out two years later compared to the 2021 report. It also estimated that Medicare costs will grow faster than the gross domestic product through the late 2070s. 

“At this time, there is no consensus among experts on the lasting effects of the COVID-19 pandemic,” a fact sheet on the report said. “We currently assume that the pandemic will have no net effect on our long-range projections.”

Deficits for the hospital trust fund are projected to exceed expenses starting again in 2023 and will continue until the depletion of the fund in 2028.

“The Trustees have determined that the fund is not adequately financed over the next ten years,” the report added. “Hospital insurance income is projected to be higher than last year’s estimates because both the number of covered workers and projected to be higher.”

The fund’s expenditures are projected to also be lower than last year’s estimates primarily because of the pandemic but could be larger after 2023 “due to higher projected provider payment updates.”

Last year, income for the Hospital Insurance Trust Fund “exceeded expenditures by $8.5 billion due in part to repayments of the accelerated and advance payments that were made in 2020,” the report added. 

Trustees reported that the Supplementary Medical Insurance Trust Fund is going to be financed for the indefinite future due to financing from general revenues and beneficiary premiums. 

Other projections in the report include:

  • Continued growth in enrollment in Medicare Advantage plans. The report projects overall participation will increase from 46% in 2022 to about 53% by 2031.
  • Growth in Part B and Part D premiums continue to outpace gross domestic product growth “and hospital insurance fund payroll tax growth in the future,” the report said.
  • Part D expenditures in 2021 were approximately $104.9 billion.