At its current pace, Medicare’s Hospital Insurance trust fund will run out of money in 2028, according to the June 2022 Medicare trustees report. That’s a two-year extension on the previous estimate, but experts say it’s still not good news, and the government needs to stop twiddling its thumbs. Here’s what you should know.
What happens if the trust fund is depleted?
If the Medicare Hospital Insurance trust fund is depleted, it doesn’t mean Medicare Part A will implode. But the program won’t have enough revenues to cover all operating costs, by a shortfall of about 10% starting in 2029.
“This part of the Medicare program won’t be able to make payments to health care providers and health insurers that are due, and those payments will become increasingly delayed over time,” says Matthew Fiedler, a senior fellow with the USC-Brookings Schaeffer Initiative for Health Policy.
This backlog could result in a big financial shock to hospitals that rely on Medicare revenues to operate. Ultimately, Fiedler says, “hospitals might rethink the extent to which they want to participate in the Medicare program.”
It’s important to understand that Medicare’s Hospital Insurance trust fund doesn’t finance all of Medicare — it funds Medicare Part A, or hospital insurance. Medicare Part B, which covers doctor’s appointments and outpatient care, and Medicare Part D, which covers prescription drugs, are funded mainly out of patient premiums and the government’s general revenues.
