The U.S. Federal Government expects to spend $910,000,000,000.00 on Health & Medicaid in 2025. This represents 13% of all Federal spending in 2025.
National healthcare programs in the United States include a range of initiatives aimed at providing health coverage and services to citizens, with Medicaid being a cornerstone program. Medicaid, established in 1965 alongside Medicare, is a joint federal and state program that provides health coverage to low-income individuals and families, including children, pregnant women, elderly individuals, and those with disabilities. The program covers essential health services such as doctor visits, hospital stays, nursing home care, and, in some states, dental and vision services. Medicaid operates as the primary safety net for low-income Americans, complementing other federal health initiatives like Medicare and the Affordable Care Act (ACA).
Medicaid is funded through a partnership between the federal government and individual states. The federal government contributes a significant portion of Medicaid funding based on a formula known as the Federal Medical Assistance Percentage (FMAP), which adjusts for a state’s average income level. States with lower average incomes receive higher federal matching rates, while wealthier states receive a lower percentage. The federal government typically covers at least 50 percent of Medicaid costs, with states responsible for the remainder. Additional funding sources include state general revenues, taxes on healthcare providers, and federal funds allocated under specific healthcare initiatives such as the ACA, which expanded Medicaid eligibility in many states.
Medicaid is part of the mandatory spending category of the federal budget, meaning its funding is determined by eligibility rules and healthcare needs rather than annual appropriations. In fiscal year 2023, Medicaid spending totaled approximately $800 billion, with the federal government covering about two-thirds of the costs and states financing the rest. Medicaid expenditures are driven by enrollment numbers, healthcare inflation, and changes in federal and state policies. Each state develops its Medicaid budget annually, working within federal guidelines to manage costs and program scope. Rising healthcare costs, demographic changes, and state-level decisions on Medicaid expansion under the ACA have contributed to the program’s growth, making it a critical and increasingly costly component of national healthcare spending. Efforts to manage Medicaid’s budget focus on innovations such as managed care programs, payment reforms, and policies to address fraud and inefficiencies.
