How much does the federal government spend on health care?
The federal government spent nearly $1.1 trillion in fiscal year 2018. In addition, income tax expenditures for health care totaled $225 billion.
The federal government spent nearly $1.1 trillion on health care in fiscal year 2018 (table 1). Of that, Medicare claimed roughly $583 billion, Medicaid and the Children’s Health Insurance Program (CHIP) about $399 billion, and veterans’ medical care about $70 billion. In addition to these direct outlays, various tax provisions for health care reduced income tax revenue by about $225 billion. Over $146 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 $280 billion in 2018.
Congressional Budget Office. 2018a. The Budget and Economic Outlook: 2018 to 2028. Washington, DC: Congressional Budget Office.
———. 2018b. “Federal Subsidies for Health Insurance Coverage for People under Age 65: 2018 to 2028.” Washington, DC: Congressional Budget Office.
Joint Committee on Taxation. 2018. “Estimates of Federal Tax Expenditures for Fiscal Years 2018–2022.” JCX-81-18. Washington, DC: Joint Committee on Taxation.
Office of Management and Budget. 2018. Budget of the United States Government, Fiscal Year 2019, Historical Tables. Washington, DC: White House.