Health-Care Spending Is Sinking the Federal Budget
High medical expenditures contribute significantly to the country’s fiscal challenges. Curbing them is the key to cutting the deficit.
Most of the increase in health-care spending since 2013 has been accounted for by Medicaid and insurance subsidies.
Photographer: Carlos Bernate/Bloomberg
The $1.8 trillion federal budget deficit in the fiscal year that ended in September was the third biggest ever in dollar terms, trailing only the pandemic deficits of the 2020 and 2021 fiscal years. As a share of gross domestic product, a better gauge for historical comparisons, it was, at 6.4%, the biggest ever outside of a large war or global crisis.
Why was the deficit so big? One way to answer that is with historical statistics, which show that federal revenue in the 2024 fiscal year was about in line with the post-World War II average, while spending really wasn’t.