CBO Says Medicare Spending Set to Nearly Double in 10 Years, Medicaid and ACA Spending Up a Third, as Trump’s Tax Cuts Shorten Their Life Span

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Federal health care spending has reached a historic turning point. It is now the single largest category of federal expenditures, having overtaken other spending categories including Social Security, national defense, and interest payments made to reduce the national debt. If current trends continue, health care will consume a huge portion of the country’s spending in the years to come.

The government is on course to spend over $26 trillion on major health programs by 2036, according to the nonpartisan Committee for a Responsible Federal Budget’s analysis of the country’s most recent fiscal outlook, published on Wednesday.

And the figures are astounding. The increase will be led by Medicare, which is projected to double in cost from $988 billion in 2025 to nearly $2 trillion by 2036. Over the next decade, spending on Medicaid and the Children’s Health Insurance Program is also expected to grow by 36%, while subsidies for the Affordable Care Act marketplaces are forecast to rise by a third from their current levels. This amounts to a fiscal path that threatens to squeeze out other spending and destabilize the nation’s primary safety nets.

This explosive growth in spending coincides with a significant decline in the solvency of the Medicare Hospital Insurance Trust Fund, which covers essential inpatient hospital and nursing facility care. That fund will now be depleted by 2040, according to the Congressional Budget Office, a significant change from the date projected just last year.

According to the CRFB, the rapidly deteriorating outlook is due to two main factors: higher projected medical costs and a sharp reduction in revenue caused by President Donald Trump’s signature One Big Beautiful Bill Act. That legislation’s tax cuts significantly decreased the income the Medicare trust fund normally receives from taxing Social Security benefits.

Despite the damaging effect Trump’s policies are projected to have, the president himself maintains his administration will work to preserve the integrity of critical government programs. During Trump’s State of the Union address this week, he pledged to “” Social Security, Medicare, and Medicaid. And while the Medicare trust fund has until 2040, the trust fund that supports Social Security could run out earlier, .

The result is a federal budget increasingly dominated by health care, which accounts for 30% of all projected spending growth through 2036. While the projections are bleak, the CRFB issued some policy recommendations that might guide the nation away from the precipice. The organization suggested measures to ensure the government pays the same rate for a service regardless of where it is provided. It also suggested cracking down on programs that are vulnerable to overpayments, such as Medicare Advantage.

If no action is taken and the trust funds run out, it would force the government to make some extremely difficult decisions. Should the Medicare trust fund become exhausted, it would be limited to paying out only what it takes in, which means benefits would likely be cut. Without intervention, the federal government could be forced to choose between deeper debt or severe cuts to care, the CRFB warned.