Medicare's hospital fund is still growing — until 2033

Medicare's Hospital Insurance program — Part A, the piece that pays for inpatient stays, skilled nursing, and home health — runs on its own trust fund, separate from Social Security's. Right now that fund is not in crisis: it grew in 2025.▸ But the growth is borrowed time. The 2026 Medicare Trustees Report, issued June 9, 2026, projects the surplus ends in 2027 and the fund itself runs out in the second quarter of 2033 — one quarter sooner than last year's estimate. The staff overseeing that machine is shrinking faster than the countdown.

Part A is financed almost entirely by a dedicated 2.9% payroll tax (split evenly between employer and employee), plus a smaller stream from taxing Social Security benefits, trust fund interest, and premiums.▸ In calendar year 2025 — reported as actual experience, not a projection, in Table II.B1 of the Trustees Report — that income exceeded spending by $18.2 billion, pushing reserves from $237.5 billion to $255.7 billion.

Of $444.2 billion spent, 99 cents of every dollar was a benefit check — hospital stays ($159.8 billion), payments to private Medicare Advantage plans for Part A services ($209.6 billion), skilled nursing ($30.7 billion), home health, and the rest.▸ Administration cost $5.9 billion, or about a cent and a third of the dollar. The gap between the $462.4 billion that came in and the $444.2 billion that went out — $18.2 billion — is what grew the fund this year.

That surplus is a countdown, not a cushion.▸ Per Table II.E1, the Trustees project cost first exceeds income in 2027, and the gap widens every year after: by 2032 the fund has shrunk to $28.1 billion, and in the second quarter of 2033 it hits zero. Under current law, Medicare cannot spend money the trust fund doesn't have — so at that point, incoming payroll taxes and premiums alone would cover only 89% of Part A's cost, an automatic 11% cut to hospitals, nursing facilities, and Medicare Advantage plans unless Congress acts first. Lawmakers have never yet let that happen to Medicare's HI fund, but the report exists specifically to put a number on what "acting first" has to fix: a 75-year unfunded obligation of $4.2 trillion.

None of that financing math depends on how many people work at the Centers for Medicare & Medicaid Services — HI is funded by payroll tax law, not appropriations.▸ But the staff who administer Part A, process claims, audit Medicare Advantage plans, and run the trust fund's accounting are a budget line, and that line has been cut twice in two years.

CMS entered FY2024 with 6,681 full-time-equivalent staff across every funding source, per its own FY2026 Congressional Justification.▸ FY2025's enacted level fell to 6,046. The FY2026 President's Budget request — filed alongside HHS's broader reorganization — asks for 5,854, a drop of 827 positions, or 12%, from two years earlier. Those staff now oversee a Medicare program the same Trustees Report projects will nearly double as a share of the economy, from 3.9% of GDP in 2025 to 6.5% by 2050, while HI alone covered 69.1 million aged and disabled enrollees in 2025.

Dollar figures cover calendar year 2025 as reported in the 2026 Trustees Report; totals are independently rounded and may not sum to the cent. Staffing figures span three consecutive CMS budget years from a single source and are not directly comparable to SSA or other agency headcounts cited elsewhere on this site.