Medicare hospital trust fund set to run out in 2033, report says

Medicare’s hospital insurance trust fund is on track to run dry in 2033, a deadline that would not shut down coverage but would force automatic benefit reductions unless lawmakers intervene. The latest trustees’ report says the fund can stay in surplus through 2027, then slide into deficits until depletion, putting a hard number on a financing gap that has been looming for years.

The Hospital Insurance trust fund pays Medicare Part A benefits, including inpatient hospital care, hospice, skilled nursing facility care and some home health care after a hospital stay. At the beginning of 2025, the fund held $237.5 billion in assets, but that was only about 53% of projected 2025 expenditures, far below the trustees’ preferred 100% reserve level.

The 2033 date marks a later deadline than the 2031 depletion estimate in the 2023 report, but it still signals that current law does not fully finance the program. Once the reserve is exhausted, incoming payroll tax revenue would still cover part of Part A costs. Benefits would continue, but they would have to be reduced to match cash coming in unless Congress changes the law.

That is the central reality behind the headline number. The depletion date does not mean Medicare hospital coverage disappears on day one. It means the program would lose the ability to pay full scheduled benefits from its trust fund balance alone, shifting the burden to a partial pay-as-you-go system and forcing lawmakers to choose between higher taxes, benefit cuts, provider payment changes or some combination of all three.

The pressure is not limited to Medicare. The 2025 Social Security trustees’ report projects the retirement trust fund will be depleted in 2033, while the combined Social Security trust funds are projected to run out in 2034. The report says the 75-year actuarial deficit widened to 3.82% of taxable payroll, and that total Social Security costs have exceeded total income since 2021.

Medicare remains one of the federal government’s largest budget commitments. KFF said the program accounted for 21% of national health-care spending and 12% of the federal budget in 2022, underscoring why the trust fund’s finances draw close attention in Washington, D.C.

The trustees’ reports were released June 18, 2025 by the U.S. Department of the Treasury, Centers for Medicare & Medicaid Services, U.S. Department of Health and Human Services, U.S. Department of Labor and the Social Security Administration. Policy groups, including the Committee for a Responsible Federal Budget, warned that Congress faces an urgent deadline to prevent automatic cuts from arriving by default.