On Feb. 23, 2026, the Congressional Budget Office sent shockwaves through the healthcare industry by predicting that the Hospital Insurance trust fund would run out of money by 2040 – a full 12 years earlier than its previous prediction. That’s one of the larger downward revisions in memory.
But the CBO looks downright optimistic compared to the Medicare Trustees, who also report annually on the HI trust fund. Last year’s report, dated June 18, 2025, predicted that the trust fund will become insolvent in 2033 – 7 years earlier than the CBO’s latest forecast.
The date is critically important to healthcare strategists because Part A insolvency will trigger immediate reimbursement cuts to avoid deficit spending, as required by law. CBO estimates and 8% cut to start, while the Trustees foresee and 11% cut.
So, do you start thinking about Medicare insolvency – and crippling reimbursement cuts – in 2033 or 2040? It’s very hard to make strategic adjustments when the models vary so drastically.
At Ascendient, we regularly do modeling in both our strategy work and our CON work, so I was struck by the unusually wide split between the CBO and the Medicare Trustees. After researching their underlying assumptions, I have a few observations:
- Two branches of government, two different mandates. CBO produces its models on behalf of the legislative branch. It has a broader purview – the fiscal position of the entire federal government – but a shorter, 30-year timeframe. The Trustees are working on behalf of the executive branch to examine the actuarial soundness of the Medicare trust funds (both hospital insurance and supplementary medical insurance). That’s a much narrower focus, but a 75-year time frame affects the underlying assumptions.
- Two different mandates, two different outlooks. The Trustees are legally required to be conservative stewards of the trust fund's solvency. That can lead to greater pessimism in their projections. CBO is required to favor current law and budget baselines. All legislation must be scored “as written,” even if policies are widely perceived as unrealistic. That scoring methodology can lead to huge swings: In its last six reports, dating back to September 2020, the CBO pegged insolvency at 2024, 2026, 2030, 2035, 2052, and 2040.
Which Model Do You Trust?
In general, Ascendient strategists pay greater attention to the Trustees’ report, due to its more conservative actuarial assumptions. When we’re talking about the sustainability of healthcare delivery in any given community, we want to understand the worst-case scenario.
I will flag, however, that we’re closely monitoring the upcoming Trustees’ report – expected in June – for any signs of political interference. The hard work of number-crunching is done by career civil servants in CMS’s Office of the Actuary, but the four Trustees who put their name on the report are all political appointees: Treasury Secretary Scott Bessent; HHS Secretary Robert F. Kennedy Jr.; Labor Secretary Lori Chavez-DeRemer; and Social Security Administrator Frank Bisignano.
Arriving just months before a crucial federal election, the report could become a political football. Postponing the headline insolvency date would allow HHS to claim it’s making progress on high-profile issues such as Medicare fraud and rising healthcare costs.
One Date That Can’t Be Faked
Rather than fixating on an exact insolvency date, which is subject to a host of political and actuarial assumptions, I recommend watching for the “tipping point” at which money stops flowing into the trust fund – and starts flowing out, instead.
Fortunately, we’re not there yet. CBO says the trust fund will continue to grow through 2031, at which point “spending begins to outstrip income.” The Trustees currently take a dimmer view, projecting just two more years of net receipts before the trust fund begins to deplete its reserves in 2028. Once spending exceeds income, the trust fund starts liquidating its Treasury securities to cover the shortfall.
That tipping point is not something that can be faked or massaged because the trust fund's Treasury holdings are publicly reported on a monthly basis, so any drawdown would be visible in the public record. Those Treasuries represent a real claim on the federal budget, so once the drawdown begins, it will ramp up pressure on deficit financing – well before the actual "insolvency" date arrives.
