Medicare Trust Fund to Run Dry 12 Years Early After Tax Cut

President Donald Trump's decision to eliminate taxes on Social Security benefits is expected to drain Medicare's Hospital Insurance Trust Fund years ahead of schedule, according to new projections from the Congressional Budget Office.

The fund will run out of money in 2040—twelve years earlier than previously estimated. The trust fund pays for Medicare hospital visits, hospice care, short-term nursing care and related services for seniors.

The loss of tax revenue from Social Security benefits is the primary driver, though other factors are also weakening the fund's finances. CBO projects reduced revenue from payroll taxes because it forecasts workers will earn less in coming years.

The accelerated timeline raises questions about the long-term sustainability of Medicare benefits as the fund approaches insolvency.