What Are the CBO’s Latest Projections for Medicaid Spending and Enrollment?
The Congressional Budget Office (CBO) projects that federal Medicaid spending will be $503 billion lower over the 2025–2035 period compared to its January 2025 baseline, according to the agency’s February 2026 report. This reduction reflects the impact of the 2025 reconciliation law, which included changes to Medicaid eligibility and financing. Enrollment is also expected to decline by 13%, with an estimated 74 million enrollees by 2034, down from 85 million projected before the law’s passage.
How Does the 2025 Reconciliation Law Affect Medicaid Spending?
The 2025 reconciliation law, signed into law by President Trump on July 4, 2025, introduced significant changes to Medicaid, including work requirements and more frequent eligibility determinations. These policies are projected to slow the growth of federal Medicaid spending, which the CBO now estimates will reach $941 billion in 2035—8% less than the $1.03 trillion projected in January 2025. However, the CBO notes that other factors, such as higher per-enrollee costs in 2025, may have offset some of the law’s reductions.
Why Are Medicaid Enrollment Projections Declining?
The CBO’s latest baseline shows a 13% reduction in average annual Medicaid enrollment by 2034, with the largest declines among adults in the ACA Medicaid expansion group. The 2025 law’s eligibility changes, including work requirements, are expected to reduce enrollment by 5 million in this group by 2034. Data show that being uninsured has implications for access to care, financial stability, and health outcomes.
What Factors Are Influencing Medicaid Spending Trends?
While the 2025 reconciliation law is a major driver of lower projections, other factors are also at play. The CBO reported a 16% increase in per-enrollee costs in 2025, partly due to declining health statuses after the end of the COVID-19 continuous enrollment period. These higher costs compound over time due to inflation and rising health care costs.
How Will These Changes Impact Different Populations?
The enrollment reductions are concentrated among ACA expansion adults, other adults, and children. The CBO estimates that 3 million fewer children and 2 million fewer other adults will be enrolled by 2034. Research shows that coverage loss among parents may reduce enrollment among children, highlighting the broader ripple effects of the policy changes.
What Are the Broader Implications of These Projections?
The CBO’s findings underscore the impact of the 2025 reconciliation law in reducing future Medicaid spending. While the 2025 law aims to curb Medicaid costs, many individuals who lose Medicaid coverage do not have another source of affordable health coverage and will become uninsured. The CBO may release updated coverage estimates in the coming months.