How much does the federal government spend on health care?
The federal government spent nearly $1.5 trillion on health care in fiscal year 2022. In addition, income tax expenditures for health care totaled $300 billion.
The federal government spent nearly $1.5 trillion on health care in fiscal year 2022 (table 1). Of that, Medicare claimed $747 billion, Medicaid and the Children’s Health Insurance Program (CHIP) claimed $609 billion, and veterans’ medical care claimed $111 billion.
In addition to these direct outlays, various tax provisions for health care reduced income tax revenue by nearly $300 billion. Over $185 billion of that figure comes from the exclusion from taxable income of employers’ contributions for medical insurance premiums and medical care. The exclusion of employer contributions to medical care also substantially reduced payroll taxes, though that impact is not included in official tax expenditure estimates. Including its impact on both income and payroll taxes, the exclusion reduced government revenue by $300 billion in 2022.
Updated January 2024
Congressional Budget Office. 2023a. The Budget and Economic Outlook: 2023 to 2033. Washington, DC.
Congressional Budget Office. 2023b. “Federal Subsidies for Health Insurance Coverage for People under Age 65: CBO and JCT’s May 2023 Baseline Projections.” Washington, DC.
Joint Committee on Taxation. 2022. “Estimates of Federal Tax Expenditures for Fiscal Years 2022-2026.” JCX-22-22. Washington, DC.
Office of Management and Budget. 2023. Budget of the United States Government, Fiscal Year 2024, Historical Tables. Washington, DC: The White House.