A new report suggests that the Medicare Trust Fund's reserves will run dry in 2033, leaving the program unable to pay for all scheduled benefits.
The Social Security and Medicare Boards of Trustees have released their annual reports, which suggest that Medicare Part A will be able to cover 100% of benefits through the second quarter of 2033, at which point the fund's reserves will be depleted.
From that point, Medicare income will be enough to cover 89% of scheduled benefits, per the report. Part A, the program's core benefit, covers inpatient hospital care, skilled nursing, home health and hospice care.
The projection is one quarter earlier than estimates from last year, the trustees said. The assumptions in the report were established in February.
The trustees cite several factors behind the worsening financial fortunes of the Medicare Trust Fund. For one, they project that higher utilization will remain a trend, draining the reserves more quickly. In addition, they accounted for "upward revisions" to average per capita spending in Medicare Advantage.
The third factor, per the report, is likely lower taxation revenue following the passage of H.R. 1, or the One Big Beautiful Bill Act.
"As always, the Trustees will continue to consider the impact of the OBBBA and any other legislation on trust fund finances and adjust projections in future reports as necessary," they wrote in the report.
Earlier this year, the Congressional Budget Office issued a similar prediction, where it estimated that the balance in the Medicare Trust Fund will grow through 2031, at which point spending will overtake revenue. CBO projects that the trust fund will run dry in 2040.
That's twelve years sooner than previous estimates from the agency.
The trustees expect the Medicare Trust Fund will run a deficit starting in 2027. Medical costs are likely rising faster than income rates through 2041, according to the report.
Beyond Part A, the trustees' report projects that disability insurance is fully funded through at least 2100, with Part B and Part D fully funded "indefinitely."