In less than a year, Trump erased 12 years of solvency for the trust fund that pays for Medicare Part A

Fortune

by Nick Lichtenberg

February 23, 2026

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The trust fund supporting Medicare Part A has been severely impacted by recent policy changes, with its projected lifespan reduced by 12 years. According to the Congressional Budget Office (CBO), the Hospital Insurance (HI) Trust Fund, which finances essential healthcare services for seniors, will be exhausted by 2040—a stark decline from the previous estimate of March 2025. This rapid depletion is largely due to significant reductions in projected income, driven by tax cuts and decreased payroll tax revenues. The Trump administration's 2025 reconciliation act, which lowered taxes on Social Security benefits, has significantly drained the fund’s future revenue stream. The HI trust fund relies heavily on Medicare payroll taxes and income taxes from Social Security benefits, with these sources contributing approximately 75% and 12-14% of its funding, respectively. However, recent tax cuts have diminished this revenue, while rising healthcare spending has further strained the fund. Per-enrollee spending in Medicare Part A’s fee-for-service program and higher bids from Medicare Advantage plan providers are both outpacing expectations, compounding financial challenges. The consequences of the trust fund’s exhaustion could be severe. Starting in 2040, Medicare benefits would need to be reduced by at least 8%, rising to 10% by 2056. This would leave seniors facing significant cuts to critical healthcare services, including hospital care, skilled nursing facilities,

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Originally published on Fortune on 2/23/2026