In fiscal year 2023, the federal government is estimated to spend $6.3 trillion, amounting to 24.2 percent of the nation’s gross domestic product (GDP). Of that $6.3 trillion, over $4.8 trillion is estimated to be financed by federal revenues. The remaining amount will be financed by net borrowing.
As the chart below shows, three major areas of spending make up the majority of the budget:
Health insurance: Four health insurance programs — Medicare, Medicaid, the Children’s Health Insurance Program (CHIP), and Affordable Care Act (ACA) marketplace health insurance subsidies — together account for 24 percent of the budget in 2023, or $1.5 trillion. One-half of this amount, or $828 billion, goes to Medicare, which provides health coverage to around 66 million people who are aged 65 and older or have disabilities. The rest of this category funds the federal costs of Medicaid, CHIP, and ACA subsidy and marketplace costs. (Both Medicaid and CHIP require states to pay some of their total costs.)
In May 2023, Medicaid and CHIP provided health care or long-term care to about 94 million low-income children, parents, older adults, and people with disabilities. That is elevated from 71 million people prior to the pandemic due to a temporary pandemic-related coverage protection that expired in April 2023. Enrollment is projected to decline by about 15 million by October 2024, but projections are highly uncertain. In February 2023, 14.3 million of the 15.7 million people estimated to be enrolled in health insurance through ACA marketplaces received subsidies that lower their premiums and out-of-pocket costs, at an estimated cost of about $88 billion.
Three other categories together account for one-quarter of spending:
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