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The trust fund that helps pay for essential medical services for older adults is running out of money, and Mehmet Oz, the television host-turned–Centers for Medicare and Medicaid Services administrator, says eliminating fraud and waste is the solution.
The Medicare Board of Trustees annual report, released last week, says the Hospital Insurance (HI) trust fund will run out in the second quarter of 2033, a quarter earlier than last year's projections.
The HI trust fund supports Medicare Part A, which helps older Americans pay for inpatient hospital services, hospice care, and skilled nursing facilities and home health services following hospital stays.1 Oz has repeatedly said that eliminating fraud and waste would "double the life expectancy of the Medicare trust fund."2
Once it runs out, Medicare Part A will only have tax revenue to cover 89% of benefits. Oz has insisted the program is safe from cuts to benefits.
"We're not touching Medicare in any way," he told Bloomberg in May.3 "The President has been very clear, he loves and cherishes Medicare, it will remain exactly as you know it, but it's going to last longer because we are taking the fraud out."
Older and disabled Americans on Medicare are partly covered by Medicare Part A to help them pay for essential hospital care. If it runs out before any solution is found, beneficiaries will either get fewer benefits or the government will need to borrow more money.
The Trump administration says it's prioritized cracking down on fraud and waste in federal programs such as Social Security, Medicaid, and Medicare, to help reduce the federal deficit. Recently, an Anti-Fraud Task Force led by Vice President J.D. Vance announced a crackdown on hospices and home health agencies (HHAs) covered by Medicare Part A.
In May, CMS and the Anti-Fraud Task Force suspended approvals of new hospices and HHAs for six months to focus on shutting down fraudulent practices.4 However, the task force has at times wrongly flagged and suspended legitimate hospice agencies, the Washington Post reported.5
Medicare's fee-for-service improper payment rate for fiscal 2025 was 6.55%, or $28.83 billion, according to the CMS.6 Improper payments can stem from fraud or abuse, but not all do. They can include overpayments, underpayments, or cases where there wasn't enough information to determine whether a payment was proper.
Eliminating improper payments entirely would get the program halfway there, or more, said Zach Gaumer, vice president of health policy at the Bipartisan Policy Center, a think tank.
Addressing fraud and waste matters, but the trust fund needs other fixes too, Gaumer said.
The trustees' report says that to make the trust fund solvent for the next 75 years, policymakers would need to either cut benefits 12% for current and future beneficiaries or raise the Medicare payroll tax from 2.9% to 3.46%.1 Delaying action means more costly changes will be needed later, the report notes.
The Bipartisan Policy Center has proposed some changes that would add costs for beneficiaries but extend the program's timeline, such as an out-of-pocket limit for those in traditional Medicare. But it has also recommended steps to shore up the trust fund: