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A KFF analysis revealed that in fiscal year (FY) 2024, 27% of federal spending ($1.9 trillion) went to health programs and services. Other major spending categories included Social Security (21%), national defense (13%), and interest on national debt (13%). Together, these four areas accounted for nearly three-quarters of all federal expenditures.
The federal government allocates funds to health programs through mandatory and discretionary spending, plus tax subsidies. FY 2024 health care spending includes: Medicare (12%), Medicaid (8%), Affordable Care Act Marketplace (2%), veterans care (2%), and global health (0.1%).
Healthcare spending in FY 2024 is under scrutiny for federal cuts, with Medicaid being a key target. Potential cuts could limit eligibility, impose work requirements, or increase costs for states with expanded programs. As a result, states might limit eligibility, cut reimbursement rates, or even end expansion programs, risking coverage for millions.
The Trump administration plans to explore additional ways to reduce healthcare costs, though extending ACA subsidies seems unlikely. However, President Trump has stated that Medicare cuts are not being considered.
Employer Takeaway
Americans primarily get health insurance from Medicare, Medicaid, ACA Marketplaces, and employer-sponsored plans. A reconciliation bill could broadly impact health insurance. With rising healthcare costs, employers should keep an eye on potential federal cost-cutting measures. Download the bulletin for more details.
