Big Beautiful Bill Ripples. Medicare Part A Goes Bust 12 Years Earlier

Feb. 28, 2026 –The Medicare Hospital Insurance (Part A) trust fund is now projected to be depleted by 2040, 12 years earlier than the Congressional Budget Office projected just last year. Experts at KFF says that the tax cuts in the “Big Beautiful Bill” are behind this giant change. This does not mean Medicare runs out of money completely. Instead, incoming payroll taxes will likely cover about 89% of benefits, meaning partial payments are likely if Congress does not act. 

• Projected Exhaustion Dates: The 2024 Medicare Trustees report estimated insolvency by 2036. The Congressional Budget Office, on the other hand, estimated a few years ago that Part A reserves would be exhausted by 2052. A new report from the Congressional Budget Office (CBO) as of Feb 2026 suggest the fund could be exhausted by 2040 due to recent legislative changes – 12 years earlier than its prediction just a year ago.
• What It Means: The trust fund (Part A) pays for hospital stays, skilled nursing, and hospice. If the fund runs out, the program will not stop, but it will only be able to pay approximately 89% of costs, according to the 2024 report.
• Parts B and D: Medicare Parts B (medical insurance) and D (prescription drugs) are funded differently and do not face the same depletion, though they are subject to rising premiums and general revenue costs. 

Historically, Congress has acted to prevent the Medicare trust fund from becoming fully insolvent before the deadline