Federal health care spending has overtaken all other categories of U.S. government expenditure, marking a significant fiscal shift. Programs such as Medicare, Medicaid, and subsidies under the Affordable Care Act now account for a growing share of federal outlays, with projections pointing to sustained increases over the next decade.
According to the Committee for a Responsible Federal Budget, the government is on track to spend more than $26 trillion on major health programs through 2036. The scale of that commitment places mounting pressure on the federal budget and raises new concerns about the long-term stability of key safety-net programs.
Medicare Surge and Accelerating Trust Fund Depletion
The most dramatic growth is expected within Medicare. Spending on the program is projected to rise from $988 billion in 2025 to nearly $2 trillion by 2036, effectively doubling within little more than a decade. Over the same period, spending on Medicaid and the Children’s Health Insurance Program is expected to increase by 36%, while subsidies for the Affordable Care Act marketplaces are forecast to climb by roughly one-third from current levels, according to the budget review.
This expansion coincides with a sharp deterioration in the outlook for the Medicare Hospital Insurance Trust Fund, which finances inpatient hospital and nursing facility care. The Congressional Budget Office reports that the fund is now projected to be exhausted by 2040, twelve years earlier than previously estimated. That revised timeline underscores the speed at which fiscal conditions have shifted.
Health care now accounts for 30% of all projected federal spending growth through 2036. As costs accelerate, the budget becomes increasingly concentrated in one area, limiting flexibility elsewhere.
Tax Policy, Revenue Declines, and Policy Trade-Offs
According to the Committee for a Responsible Federal Budget, two primary factors explain the worsening outlook: higher projected medical costs and reduced revenue linked to President Donald Trump’s signature tax legislation, the One Big Beautiful Bill Act. The law’s tax cuts reduced income flowing into the Medicare trust fund by lowering revenue generated from taxes on Social Security benefits.
Despite these projections, President Trump has stated that his administration will protect major entitlement programs. During his State of the Union address this week, he pledged to “always protect” Social Security, Medicare, and Medicaid. Still, fiscal projections show mounting strain. The trust fund supporting Social Security could run out as soon as 2031, while the Medicare hospital fund faces its own 2040 deadline, according to the Congressional Budget Office.
The budget review warns that if no corrective measures are taken and trust funds become depleted, the government would be limited to paying benefits only from incoming revenue. In the case of Medicare, that scenario would likely require benefit reductions. The organization notes that policymakers could face a stark choice between allowing deeper federal debt or enacting significant cuts to care.
To mitigate these risks, the Committee for a Responsible Federal Budget has outlined policy options, including paying the same rate for a service regardless of where it is delivered and strengthening oversight of programs vulnerable to overpayments, such as Medicare Advantage.
