![]() These tax provisions are similar to federal spending in that they provide benefits from the federal government to employers, individuals, and other entities. In addition to federal spending on health programs and services, the federal government provides several tax benefits that support health-related activities, known as tax expenditures. ACA premium tax credits-which include a refundable portion that counts as outlays and a non-refundable portion that counts as lost revenue-represent a much smaller portion (5% of mandatory outlays). Medicare alone, which covers 65 million older adults and younger people with long-term disabilities, accounts for half of mandatory spending on federal health programs and services, while Medicaid, which covers 84 million individuals, accounts for another 37% (Figure 2). Mandatory health spending includes nearly all Medicare spending, federal spending on Medicaid and CHIP (which are jointly funded by states and the federal government), and the refundable portion of the health insurance premium tax credit for coverage through the ACA Marketplaces, along with other mandatory health spending, which is detailed in Table 1. Mandatory spending is not subject to annual appropriations votes by Congress but instead mandated by existing laws. Mandatory spending comprises the majority (88% or $1.6 trillion) of federal spending on health programs and services. By comparison, Social Security accounted for 21% of federal outlays in FY 2023, while defense accounted for 13%. Specifically, Medicare accounted for 13% of the total, Medicaid and CHIP accounted for 10%, other domestic health spending accounted for 4%, hospital and medical care for veterans was 2%, and global health was 0.1%. Federal spending on domestic and global health programs and services accounted for 29% of net federal outlays in fiscal year (FY) 2023 (taking into account offsetting receipts), or $1.9 trillion out of $6.4 trillion (Figure 1). The federal government provides support for health programs and services both through spending on programs and services and through tax expenditures. (See the Methods box for details on the data used for this analysis.) How much support does the federal government provide for health programs and services? President’s Plan for AIDS Relief (PEPFAR). ![]() Discretionary spending also includes domestic health programs and services, such as hospital and medical care for veterans, and the Indian Health Service and spending for global health programs and services, such as the U.S. Health spending includes mandatory spending on health insurance programs like Medicare, Medicaid, the Children’s Health Insurance Program (CHIP), and the ACA Marketplaces and discretionary spending on federal agencies such as the Centers for Disease Control and Prevention (CDC), the National Institutes of Health (NIH), the Food and Drug Administration (FDA), and the Health Resources and Services Administration (HRSA. These FAQs answer basic questions about health spending and the federal budget and budget enforcement tools, including the debt limit and sequestration. This leaves open the question of whether Medicaid, the Affordable Care Act (ACA) premium tax credits, and possibly other health programs and services could be targeted for spending reductions in the near future. House Speaker McCarthy has agreed that cuts to Social Security and Medicare are “off the table” in these discussions but has not ruled out seeking other spending cuts. The Biden Administration has said it will not negotiate spending reductions as part of debt limit talks but is open to separate discussions about approaches to debt and deficit reduction. In current discussions around the debt limit, some Republican lawmakers have pushed for reductions in future federal spending as part of a deal to raise the debt limit. Congress has passed legislation 20 times since 2001 to increase or suspend the debt limit to avoid the federal government defaulting on its obligations. The amount of the debt limit is established by law and increasing or suspending it requires legislative action. The debt limit, also known as the debt ceiling, is the maximum amount of money that the federal government is legally authorized to borrow to cover federal spending, including Social Security, Medicare, defense, and other federal government programs and obligations. had reached the $31.381 trillion debt limit, prompting the Treasury Department to begin taking so-called “extraordinary measures” that are expected to help the government avoid defaulting on its debt until the summer of 2023. In January 2023, Treasury Secretary Yellen announced that the U.S. Note: This brief was updated on March 20, 2023, to include details on fiscal year 2023 spending from the fiscal year 2024 budget released by the Biden Administration on March 9, 2023. ![]()
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