Rebecca Pifer

Fri, Jun 20, 2025, 1:58 AM4 min read

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• A key trust fund underpinning Medicare’s hospital benefit will go broke three years earlier than previously expected absent congressional action, threatening benefits for seniors, according to the Medicare trustees’ annual report released Wednesday.

• The Medicare Hospital Insurance trust fund will be depleted in 2033, instead of 2036, as Medicare spending continues to outpace the program’s income, the trustees — a group comprised of the HHS, Treasury and Labor secretaries, along with the Social Security commissioner — warned.

• The bleaker outlook is due to higher-than-expected spending for hospital care, hospice services and physician-administered drugs. The trustees called on Congress to act quickly to stabilize Medicare, though near-term action is unlikely as the Republican majority focuses on advancing their reconciliation megabill.

Medicare has been teetering on the edge of insolvency for a while. But the latest report from Medicare’s trustees is more dire than last year’s, which projected Medicare would become insolvent in more than a decade.

Now, Medicare’s hospital trust fund will start running out of money in eight years — when today’s 57-year-olds first become eligible for the program.

The looming go-broke date is a result of the fund’s substantial shortfall as Medicare costs continue to grow rapidly, trustees said in the report. Medicare costs are expected to increase from 3.8% of the gross domestic product in 2024 to 6.2% in 2050 before reaching 6.7% in 2099, the report projects.

Costs to another fund that pays Parts B and D, called the Supplemental Medical Insurance trust fund, are also climbing, increasing pressure on beneficiary budgets and the federal budget. (Though, the Supplemental Medical Insurance trust fund is largely funded by premiums and general revenue that resets each year and doesn’t face the same solvency concerns.)

This year’s estimates, which are based on current payment rates, could be conservative, trustees said. Under an alternate scenario, in which provider payments grow at a rate more consistent with underlying medical costs — a change aggressively lobbied for by physician associations — Medicare spending will rise to 8.8% of the GDP in 2099 rather than 6.7%, according to the report.

The precarious footing of the federal insurance program, which covers almost 69 million people in the U.S., is due to the country’s underlying demographic shifts, according to experts.