(UNITED STATES) — President Trump pledged in his February 2026 State of the Union address that “always protect Social Security, Medicare, Medicaid,” even as budget analysts and Democrats tied his signature tax law to faster funding strains across the programs.
Trump highlighted benefits from the One Big Beautiful Bill Act, known as OBBBA or OBBB, a measure enacted as Public Law 119-21 and signed July 4, 2025. The law extended major Tax Cuts and Jobs Act provisions and added tax changes that Republicans have promoted as relief for working families and retirees.
Updated projections from the Congressional Budget Office connected the law’s tax cuts to a shorter solvency window for Medicare’s Hospital Insurance Trust Fund, the financing account for Medicare Part A that pays for services such as hospital care and hospice. The same projections sit at the center of a widening fight over whether Trump’s pledge can square with the fiscal trajectory implied by the law already on the books.
In the address, Trump pointed to tax provisions including no tax on tips and overtime, along with a temporary $6,000 deduction for seniors aged 65+ that phases out above $75,000 single/$150,000 married income. Critics have argued those and other changes reduce federal revenue and intensify pressure on programs that rely on payroll taxes and other dedicated funding streams.
The CBO’s post-OBBBA update showed Medicare’s Hospital Insurance trust fund exhaustion moved earlier, shortening solvency by 12 years from 2052 in a March 2025 estimate to 2040. Under current-law assumptions, the projection tied that shift to reduced revenue, including changes that lowered payroll tax income and reduced receipts from taxing Social Security benefits.
CBO’s numbers carried concrete consequences for Medicare Part A if lawmakers do not change course. Once the trust fund reaches exhaustion, Medicare can pay Part A claims only from incoming revenue, forcing across-the-board constraints rather than allowing full scheduled payments.
In CBO’s estimate, that translates into an 8% benefit cut in 2040, rising to 10% by 2056 for Part A services that include hospital care and hospice. The projections describe reductions that would apply broadly because the program could not legally pay full amounts without sufficient funds.
Social Security faces its own deadline in the debate, with the trust fund projected to deplete by fiscal year 2032, starting October 2031. Under current law, the program would then rely on incoming revenue to pay benefits, a mechanism that can require lower payments than scheduled benefits.
The Committee for a Responsible Federal Budget put a household-level figure on that risk, estimating a typical couple turning 60 today would lose $18,400 annually in benefits without intervention. That estimate has circulated as lawmakers and advocacy groups try to translate long-range projections into near-term political stakes.
The Medicaid fight has proved more immediate, because it intersects with coverage rules, state budgets, and changes to health policy that affect eligibility and financing. Opponents of OBBBA said it cut over $1 trillion from health programs and could lead 10 million to lose coverage, while also tightening rules that affect lawfully present immigrants and limiting how states raise matching funds through provider taxes.
The debate also folded in the Affordable Care Act marketplace, because critics tied coverage losses to the timing of marketplace subsidy changes. Those subsidies expire end-2025, which critics said would add 5 million uninsured.
The White House pushed back against claims that the law directly cuts benefits, arguing the changes focus on program integrity. It said OBBB “safeguards and protects” Medicare and Medicaid with no direct benefit reductions, and framed the effort as targeting “waste, fraud, abuse,” illegal immigrants, and able-bodied adults through work requirements.
In that argument, the administration pointed to error and integrity figures as justification for tightening eligibility and enforcement. The White House cited $56 billion improper payments last year, and also referenced half-trillion improper Medicaid payments past decade as part of its broader case that savings can come from enforcement rather than benefit reductions.
Medicaid’s structure leaves states exposed when federal rules change, because states administer the program and must balance budgets even when federal funding shifts. With OBBBA reducing federal support through multiple channels, critics said state budgets face strain from reduced federal Medicaid and SNAP funds, a dynamic that can reverberate through provider payments, eligibility, and optional benefits.
The fiscal fight extends beyond health coverage to the overall deficit, where supporters and critics have competed to define the budgetary bottom line. The Joint Committee on Taxation estimated OBBBA added $3.4-$3.5 trillion to deficits over 10 years, even as the law included $120 billion SNAP cuts.
Those deficit estimates matter because statutory enforcement rules can translate paper deficits into mandated spending reductions. Under statutory PAYGO, scorekeepers can trigger sequestration orders that cut certain mandatory programs to offset legislation that increases the deficit.
In the OBBBA debate, that mechanism drew attention to Medicare because of the scale of potential savings under sequestration and the limits imposed by law. The law’s opponents argued the tax cuts knowingly set up later cuts through enforcement rules even if lawmakers claim they did not vote for direct reductions in benefits.
One set of figures circulating in the fight showed statutory PAYGO sequesters triggering $536 billion in cuts for 2026-2034, starting at $45 billion in 2026 and reaching $76 billion by 2034. Medicare payments face a cap of 4% cut, a limit that constrains how much any sequestration order can take from the program even when the PAYGO totals are larger.
OBBBA also carried other Medicare-related provisions cited by critics as reductions in expected spending or limits on program changes. Those included a nine-year ban on Medicare Savings Program improvements that was scored as $66 billion “savings” over 10 years, and the law blocked nursing home staffing standards.
Democrats have used sharper language to describe the law and the political choices behind it. House Democrats, led in messaging by Ranking Member Boyle, called it “Trump’s Big Ugly Law,” and argued Republicans knowingly triggered Medicare sequestration for billionaire tax breaks.
The White House’s defense has leaned heavily on distinctions between direct benefit cuts and other policy changes that reduce federal spending or limit growth in future outlays. It has also emphasized that projections depend on current-law assumptions that can change if Congress enacts new taxes, spending reductions, or benefit changes.
CBO Director Phillip Swagel has cautioned that projections reflect how the law operates under existing statutes rather than a fixed political outcome. Swagel said the projections assume scheduled benefits post-exhaustion under the Deficit Control Act, a technical point that shapes estimates of what happens when a trust fund can no longer pay full scheduled amounts.
That caveat has become central to the political messaging, because both parties argue their preferred policies would avert the most severe outcomes. Republicans point to economic growth and enforcement efforts, while Democrats argue the tax cuts made the financing math harder and increased the odds of reductions that hit seniors and low-income families.
The clash has also turned on what the law did not do, as much as what it did. OBBB excludes full Social Security benefit tax elimination, an idea long promoted by Republicans and popular among many seniors, and budget analysts projected that change would cost $1.4 trillion over 10 years.
That omission has remained politically salient because it highlights the difference between campaign-style promises and enacted policy. In Washington’s trust-fund debates, it also underlines how hard it can be to expand benefits or cut taxes while also claiming to protect Social Security, Medicare, and Medicaid without specifying how to replace lost revenue.
For health providers and insurers, the argument is not just about accounting but about operational constraints that kick in when trust funds run dry or when statutory caps restrict payments. Medicare Part A finances inpatient hospital care, skilled nursing, and hospice, and payment reductions ripple through systems already grappling with staffing, inflation, and the demands of an aging population.
For families, the political crossfire has landed on household questions about retirement timing, benefit checks, and medical bills, even as both parties insist they stand for protection. Trump’s pledge that the government will “always protect Social Security, Medicare, Medicaid,” now sits alongside projections that, absent legislative changes, point toward less money available to pay full promised benefits.
Trump Promises to Protect Social Security and Medicare as Tax Cut Drains Hospital Insurance Trust Fund
The debate over the One Big Beautiful Bill Act centers on the tension between permanent tax cuts and the long-term solvency of Social Security and Medicare. While the White House emphasizes program integrity and economic growth, budget analysts warn of accelerated trust fund depletion and potential benefit reductions. The fiscal impact includes a projected $3.5 trillion deficit increase and significant changes to Medicaid eligibility and state funding structures.
