Medicaid’s Ever-Expanding Fiscal Burden

by Dan Mitchell | Jul 14, 2026

Nine years ago, I shared some depressing charts about Medicaid.

The fiscal outlook today is even worse, as illustrated by this chart based on national health expenditure data from the Centers for Medicare & Medicaid Services.

The chart is entitled “Where Are the Medicaid Cuts?” because if you do an online search, you will literally find thousands of news reports about supposed “Medicaid cuts.”

In reality, all of these stories rely on the utterly dishonest Washington definition of a cut, which is when a program doesn’t grow as fast as previously projected.

The Wall Street Journal opined about this dodgy approach. Here are some excerpts.

The CBO report for June shows…higher outlays on Social Security ($62 billion), Medicare ($58 billion or 8%), Medicaid ($49 billion or 10%) and the Department of Veterans Affairs ($26 billion or 9%). …Last year’s GOP tax bill made modest changes to Medicaid such as imposing work requirements for able-bodied recipients covered by ObamaCare and restricting a scheme that states use to launder more federal funds. Democrats accuse Republicans of gutting Medicaid, yet spending is still growing faster than almost any other program. …the bigger problem is that the feds pick up 90% of the tab for the ObamaCare expansion population. This is an inducement for states to spend more on these able-bodied beneficiaries. One way to reduce this perverse incentive is to set the federal matching rate for ObamaCare enrollees equal to traditional Medicaid’s.

For what it’s worth, I think the WSJ‘s suggestion about reducing the federal government’s subsidy for able-bodied recipients is too timid.

As I explained in this video, the entire program should be devolved to the states. If states want bad policy, they should do it with their own money.

Devolution worked well with welfare reform in the 1990s and it would work today with Medicaid reform.

But the focus for today’s column is how Medicaid is a fiscal problem (as are other entitlement programs) and why politicians should not engage in demagoguery about make-believe cuts.

I’ll close with another example. The pro-spending lobbies are pushing for a wealth tax in California to offset supposed Medicaid cuts.

Yet here’s a chart showing that Medicaid spending in California is spiraling out of control.

P.S. The same problem of fake spending cuts exists whenever anyone proposes to reform or restrain Medicare spending.