Biden’s Medicaid Blowout — $1.24 Trillion Surge

A loyal reader pointed out that the Biden Medicaid blowout was even worse than what I shared a few weeks ago. He pointed me to the January 2025 baseline. He was right. CBO now projects federal Medicaid spending to be $1.243 trillion higher over the next decade (2026-2035) relative to its 2021 baseline.

This clearly shows how out of whack federal Medicaid spending became during the Biden administration—a result of his policies that made it more difficult for states to remove ineligible enrollees and that exacerbated state Medicaid money laundering tactics. As a result, there has been a significant cost shift for financing Medicaid from the states to the federal government. In fact, the federal share of Medicaid increased from 60 percent in 2008 to 72 percent in 2023. And, as we showed in a recent policy brief, Medicaid improper payments were $1.1 trillion over the past decade.

The second figure illustrates an $800 billion reduction in federal Medicaid spending relative to the 2025 baseline. This figure provides important perspective on the hysteria that many are raising about large Medicaid “cuts.” If Congress were to make $800 billion in federal Medicaid savings, total federal Medicaid spending would still be $443 billion above CBO’s 2021 projections over the 2026-2035 period.

Congress and the Trump administration must reduce the rampant waste, fraud, and abuse in the Medicaid program; restore its primary focus to serving children, pregnant women, and the disabled and not the current structure that advantages able-bodied, working-age, childless adults; and confront states’ growing use of money laundering to maximize federal Medicaid funds.