US Medicaid Spending Since 1965

Medicaid benefits cost about 3 percent of GDP each year.

Medicaid, the joint federal/state health care program for the poor, was passed in 1965. Benefits began in 1966 and rapidly climbed to over 0.5 percent of GDP by 1971, before slowly flattening out to 1 percent of GDP in the late 1980s.

Starting in the 1990s Medicaid began a rapid increase in cost, hitting 1.5 percent of GDP in 1991, and 1.9 percent in 1995. In the recession of 2000-1 Medicaid spending took another bump up to 2.4 percent GDP in 2004, then up to 2.6 percent GDP after the Great Recession of 2006-08.

When the Patient Protection and Affordable Care of 2010 Act kicked in in the mid 2010s, Medicaid spending bumped up to 3 percent of GDP. In the COVID crisis of 2020 Medicaid bumped up to 3.3 percent GDP. In 2025 Medicaid spending was 2.9 percent GDP.

US Medicaid Shares Between Feds and States

The federal government picks up about 2/3 of the cost of Medicaid.

Medicaid, the joint federal/state health care program for the poor, was advertised as a 50-50 program, with 50 percent paid for by the federal government and 50 percent paid for by the states. This held until about 1990 when the federal share started increasing. By 2018, after the implementation of the PPACA Act, the federal share was 1.89 percent of GDP and the state share was 1 percent GDP.

In 2025 the federal Medicaid share was estimated at 2.17 percent GDP. and the state share was 0.73 percent GDP.