Medicare and Medicaid expenses distribution U.S. 2021

In 2021, Medicare and Medicaid national health expenditures reached 900 billion U.S. dollars and 734 billion U.S. dollars, respectively. The largest expense category for both healthcare care programs was hospital care.

Long-term care solutions

Medicaid’s second-largest expense category was other health care, which includes programs that provide alternatives to long-term institutional services. The use of home- and community-based services can substantially reduce expenditures for enrollees who would otherwise have to receive care in an institutional setting, such as a nursing home. In recent decades, there has been a significant shift in the distribution of Medicaid’s long-term care services expenditures.

Medicaid’s federal-state partnership

Medicare is a health insurance program solely funded by the federal government, whereas Medicaid plays an important role in both federal and state budgets. The federal government establishes certain parameters for all states to follow, but states can decide who gets coverage and what gets covered in its version of Medicaid. In 2021, California was the state with the highest Medicaid expenditure.

Distribution of Medicare and Medicaid spending in 2021*

Characteristic	Medicare	Medicaid
Hospital care	39%	33%
Physician and clinical services	25%	14%
Other professional services	4%	1%
Dental services	1%	2%
Nursing care facilities	5%	7%
Home health care	5%	6%
Other health care	1%	18%
Prescription drugs	13%	5%
Other medical products	2%	1%
Net cost of health insurance	5%	8%
Government administration	1%	4%

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Release date

August 2023

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Region

United States

Survey time period

2021

Supplementary notes

* Health spending refers to national health expenditures.
Figures may not equal 100 percent due to rounding.
Government administration includes the administrative costs of government health care programs such as Medicare and Medicaid.
Net cost of health insurance reflects the difference between benefits and premiums for private insurance and includes administrative expenses, premium taxes, and profits.
Other health care refers to the category other health, residential, and personal care.
Other medical products is durable medical equipment and nondurable medical products.

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