Executive Summary

• Today, the Social Security and Medicare Trustees released their annual reports on the financial status of the nation’s two largest entitlement programs; the reports reiterate a past conclusion: Social Security and Medicare are approaching insolvency.
• The Medicare Trustees estimate the Medicare Hospital Insurance (Part A) trust fund will be insolvent by 2033, at which point Medicare Part A spending will be slashed by 11 percent.
• The Social Security Trustees estimate the Social Security Old-Age and Survivors Insurance trust fund will deplete its reserves by 2032 and the much smaller Social Security Disability Insurance trust fund will remain solvent at least through 2100; the theoretically combined Social Security trust funds will be insolvent by 2034, at which point all beneficiaries regardless of age, income, or need will face a 17 percent benefit cut.
• These projections show that both Social Security and Medicare are on the verge of bankruptcy and highlight the need for policymakers to enact trust fund solutions sooner rather than later to prevent across-the-board benefit and spending cuts.

Introduction

Today, the Social Security and Medicare Trustees released their annual reports on the financial status of the nation’s two largest entitlement programs. As with past reports, the 2026 Social Security and Medicare Trustees reports warn that Social Security and Medicare are approaching insolvency. The Medicare Trustees estimate the Medicare Hospital Insurance (HI) trust fund, which funds Medicare Part A, will be insolvent by 2033. The Social Security Trustees estimate the Social Security Old-Age and Survivors Insurance (OASI) trust fund will deplete its reserves by 2032 and the much smaller Social Security Disability Insurance (SSDI) trust fund will remain solvent at least through 2100. On a theoretically combined basis, assuming dedicated revenue is reallocated in the years between OASI and SSDI insolvency, the Social Security trust funds will be insolvent by 2034.

The Long-term Solvency of Medicare

The 2026 Medicare Trustees report delivered yet another reminder to policymakers and the public that Medicare is undeniably going bankrupt.

The Medicare Trustees estimate the Medicare HI trust fund will be insolvent by 2033. This shows neither improvement nor deterioration from last year’s report. While the bankruptcy projection may snag the headlines, there are three key budgetary numbers that shouldn’t go unnoticed.

Key Figures in the 2026 Medicare Trustees Report

-$641.6 Billion	Medicare’s Contribution to the Debt in 2025 In 2025, Medicare spent $1.2 trillion on medical services for the nation’s seniors but collected only $568.4 billion of revenue from payroll taxes and monthly premiums. Medicare Part A ran a $18.2 billion surplus in 2025. The HI surplus represented 1.1 percent of the federal budget deficit in 2025.
$8.49 Trillion	Medicare’s Cumulative Cash Shortfall Since 1965 Medicare has faced a cash shortfall every year since its creation except in 1966 and 1975. Medicare covers its cash shortfall by “borrowing” unrelated tax revenue.
29 Percent	Medicare’s True Contribution to the National Debt The nation’s fiscal trajectory is unsustainable, and Medicare is a primary source of red ink. Medicare’s cash shortfall is responsible for 29 percent of the national debt.

Sources: Centers for Medicare and Medicaid Services and authors’ calculations.

Continuing with the Medicare status quo is unsustainable. Balancing Medicare’s annual cash shortfall under the existing system would prove devastating to seniors and failing to reform the status quo would result in the following:

Annual Premium Increases Needed to Balance Medicare Parts B and D

$6,410 Increase	Annual Premium Increase Needed to Balance Medicare Part B In 2025, the Medicare Part B (physicians) cash deficit was $434 billion. Seniors’ premiums for physicians would need to increase by 289 percent to cover the deficit, meaning the typical annual physician premium cost for seniors would increase by $6,410, from $2,220 to $8,630.
$4,935 Increase	Annual Premium Increase Needed to Balance Medicare Part D In 2025, the Medicare Part D (prescription drugs) cash deficit was $166.6 billion. Seniors’ premiums for prescription drugs would need to increase by 1,118 percent to cover the deficit, meaning the annual drug premium cost for seniors would increase by $4,935, from $441to $5,376.

Sources: Centers for Medicare and Medicaid Services and authors’ calculations.

The Executive Branch’s Stewardship of Medicare

An Evaluation of the Executive Branch’s Medicare Stewardship

Each year, the Medicare Trustees report provides a nonpartisan evaluation of the president’s stewardship of Medicare. Prepared annually for Congress by the Office of the Chief Actuary, the report offers unparalleled detail on the financial operations and actuarial status of the Medicare program. In short, it’s where every administration’s soaring Medicare rhetoric meets fiscal reality. So far, President Trump has resisted undertaking significant Medicare reform. The 2026 Medicare Trustees report provides a sense of what the future may look like should Medicare continue to remain unchanged, and why sooner or later broader Medicare reform is inevitable.

Medicare’s Financial Operations, 2026-2036 (Billions of dollars)

	2026	2027	2028	2029	2030	2031	2032	2033	2034	2035	2026-2036
Medicare Revenue	$1,373.9	$1,424.6	$1,561.6	$1,665.5	$1,780.6	$1,895.9	$2,008.9	$2,151.9	$2,229.2	$2,439	$18,601
Medicare Spending	$1,328.9	$1,440.9	$1,567	$1,683	$1,807.2	$1,935.8	$2,058	$2,213	$2,387.8	$2,543.1	$18,964.7
Medicare Surplus/Deficit	$45	-$16.3	-$5.4	-$17.5	-$26.6	-$39.9	-$49.1	-$61.1	-$88.6	-$104.1	-$363.6

Source: Centers for Medicare and Medicaid Services.

The first Trump Administration oversaw a $1.6 trillion cash shortfall over four years (2017–2020). The Biden Administration oversaw its own $1.6 trillion cash shortfall over four years (2021–2024). This year will be impactful due to the enactment of recent changes to coverage under the Medicare program, including cost-sharing and out-of-pocket caps on medical spending and prescription drugs, which are expected to increase government outlays. In short, Medicare’s fiscal trajectory guarantees bankruptcy if changes are not made.

With such unprecedented levels of cash shortfalls continuing through the budget horizon, maintaining the status quo ensures that Medicare will soon not exist for today’s seniors, let alone future generations of Americans. These rising costs and the measures necessary to cover them will increasingly harm seniors if Medicare reform is not undertaken.

 Projected Cost of Medicare and Medicaid in 2026

Medicare and Medicaid Will Cost $2.1 Trillion in 2026

Medicare Costs Will Continue to Rise At their current pace, Medicare and Medicaid are projected to cost $2.1 trillion in 2026. The budget shortfall remains imminent, even as Medicare premiums and deductibles rise.

Sources: Centers for Medicare and Medicaid Services and authors’ calculations.

The Long-term Solvency of the Social Security Old-Age and Survivors Insurance Trust Fund

The 2026 Social Security Trustees report shows that OASI program remains unsustainable and will be unable to meet the needs of current and future beneficiaries absent significant reforms.

The Social Security Trustees estimate the OASI trust fund will exhaust its reserves by 2032, one year earlier than last year’s projection. The report also makes clear several additional structural challenges that endanger the millions of current and future retirees and survivors who rely on this program.

The year 2032 is only six years away, which means the Social Security OASI program will go bankrupt when today’s 61-year-olds reach the normal retirement age of 67 and today’s youngest retirees – those retiring at age 62 – turn 68.

Upon insolvency, the OASI program will only be able to pay 78 percent of promised benefits, meaning all beneficiaries regardless of age, income, or need will see their benefits slashed by 22 percent.

Key OASI Figures in the 2026 Social Security Trustees Report

Key OASI Figures in the 2026 Social Security Trustees Report

$262 Billion	OASI’s Contribution to the Debt in 2025 In 2025, the OASI program spent $1.4 trillion but collected only $1.2 trillion in non-interest income (payroll tax and benefit tax collections). 2025 was the 16th consecutive year in which the OASI program ran a cash deficit, with the program running a $1.3 trillion cumulative cash deficit since 2010.
$30.3 Trillion	OASI’s Open-group Unfunded 75-year Liability Social Security’s OASI promised retirement and survivors’ benefits exceed projected payroll tax revenue and trust fund redemptions by $30.3 trillion. Social Security OASI faces a 75-year actuarial imbalance of 4.55 percent of taxable payroll – 0.6 percentage points higher than last year’s estimate of 3.95 percent of taxable payroll.
6 Years	6 Years Until the OASI Trust Fund Is Depleted The horizon to the OASI trust fund’s exhaustion is 1 year earlier than in last year’s report. 6 years is the second-shortest horizon until OASI trust fund exhaustion since 1982.
71 Million	Number of OASI Beneficiaries in 2032 (Exhaustion Year) Over 71 million retirees and their survivors are projected to receive OASI benefits in the year the trust fund is projected to become insolvent. The 71 million figure is comprised of nearly 66 million retired workers and their auxiliaries and nearly 6 million survivors.

Sources: Social Security Administration and authors’ calculations.

Benefit Cut or Payroll Tax Increase Needed to Balance Social Security OASI

22 Percent	Reduction in Benefits in 2032 Upon insolvency of the OASI trust fund, dedicated revenue will be able to cover only 78 percent of promised benefits, meaning all beneficiaries regardless of age, income, or need, will face a 22 percent benefit cut. The projected benefit cut climbs to 38 percent by 2100.
52 Percent	Payroll Tax Increase in 2032 Absent reforms to restore long-term solvency to Social Security OASI, the OASI payroll tax would need to be increased immediately by 52 percent (5.5 percentage points), from 10.6 percent to 16.1 percent.

Sources: Social Security Administration and authors’ calculations.

The Long-term Solvency of the Social Security Disability Insurance Trust Fund

The 2026 Social Security Trustees report shows continued improvement to the financial outlook for the SSDI program.

The Social Security Trustees estimate the SSDI trust fund will remain solvent over the 75-year projection window. This marks the fifth time since 1983 that the SSDI program has been sustainable over the long term. The program faced solvency challenges in recent years that required a payroll tax reallocation in 2015.

Key SSDI Figures in the 2026 Social Security Trustees Report

-$33 Billion	SSDI’s Contribution to the Debt in 2025 In 2025, the SSDI program was in balance, with a surplus of $33 billion, but the program has added almost $49 billion to the national debt since 2010. Recent improvements to the SSDI program’s cash position reflect a significant decline in benefit applications and awards.
-$994 Billion	SSDI’s Open-group Unfunded 75-year Liability Social Security’s promised disability benefits are funded over the long term, a reflection of the recent improvement and payroll tax reallocation. SSDI faces a 75-year actuarial balance of -0.13 percent of taxable payroll – 0.1 percentage points higher than last year’s estimate of -0.12 percent of taxable payroll.

Sources: Social Security Administration and authors’ calculations.

The Long-term Solvency of the Theoretically Combined Social Security Trust Funds

The 2026 Social Security Trustees report delivered yet another reminder to policymakers that the financial outlook for the nation’s primary safety net for retirees, survivors, and the disabled will fail to meet its promises to future seniors in the absence of meaningful reform.

The Social Security Trustees estimate theoretically combined trust funds (OASDI), assuming dedicated revenue is reallocated in the years between OASI and SSDI insolvency, will be insolvent by 2034, the same as projected in the 2025 report. The report demonstrates the program’s structural imbalance that puts the retirement benefits of millions of retirees and their survivors as well as disabled workers at risk.

Key OASDI Figures in the 2026 Social Security Trustees Report

$229 Billion	Social Security’s Contribution to the Debt in 2025 In 2025, Social Security spent $1.6 trillion but only collected $1.4 trillion in non-interest income (payroll tax and benefit tax collections). 2025 was the 16th consecutive year in which Social Security ran a cash deficit, with the program running a $1.4 trillion cumulative cash deficit since 2010.
$29.3 Trillion	Social Security’s Open-group Unfunded 75-year Liability Social Security’s promised benefits exceed projected payroll tax revenue and trust fund redemptions by $29.3 trillion. Social Security faces a 75-year actuarial imbalance of 4.42 percent of taxable payroll – 0.6 percentage points higher than last year’s estimate of 3.82 percent of taxable payroll.
8 Years	The theoretically combined Social Security trust funds (OASI and SSDI) will be exhausted in 8 years. The horizon to exhaustion remains the shortest since 1982.

Sources: Social Security Administration and authors’ calculations.

The 2026 Social Security Trustees report paints a troubled picture of Social Security’s financial health and demonstrates that the present course is unsustainable. Social Security is now contributing to the annual deficit, while promised benefits exceed planned funding by over $29 trillion. The implications of failing to reform the status quo are:

Benefit Cut or Payroll Tax Increase Needed to Balance Social Security OASDI

17 Percent	Reduction in Benefits in 2034 Upon insolvency of the Social Security trust funds, Social Security revenue will only be able to cover 83 percent of promised benefits, meaning all beneficiaries regardless of age, income, or need, will face a 17 percent benefit cut. The projected benefit cut climbs to 35 percent by 2100.
40 Percent	Payroll Tax Increase in 2034 Absent reforms to restore long-term solvency to Social Security, the payroll tax would need to be increased immediately by 40 percent (4.9 percentage points), from 12.4 percent to 17.3 percent.

Sources: Social Security Administration and authors’ calculations.

The 2026 Social Security Trustees report makes clear that the primary federal entitlement program remains unsustainable. On its present course, the program is on track to reduce benefits by 17 percent for all beneficiaries regardless of age, income, or need in just 8 years if steps are not taken to shore up its finances.