Kerby Anderson

This year, we had two attempts at cutting waste in the federal government. President Trump formed the Department of Government Efficiency (DOGE) and put Elon Musk in charge. When Musk left after serving 135 days, DOGE claimed to have found “hundreds of billions” in waste. But the latest recission bill to pass the House of Representatives only listed $9.4 billion in savings.

We have also had a budget battle with the so-called “big, beautiful bill.” While there were many provisions that could save taxpayer dollars, the bill still fell way short of closing the annual $1-2 trillion deficits. The only way to close that gap is to focus on healthcare waste.

In 2024, the U.S. spent $4.8 trillion on healthcare. A quarter century ago, we spent less than a third (31%) of that on regulatory overhead. Once the Affordable Care Act (also known as Obamacare) was passed, we began spending half of every dollar on rules, regulations, and bureaucrats. Between 1970 and 2020, the number of practicing U.S. physicians rose by about 100 percent. Over that same period, the number of healthcare bureaucrats exploded by more than 4,000 percent.

One proposed solution would be to provide Medicaid funding as block grants. Under the current system, the more a state spends, the more it receives in federal matching funds. This creates an incentive to enroll and even over-enroll.

An unrestricted block grant would give each state a fixed amount of federal funding and would eliminate the incentive to expand Medicaid rolls to increase federal funding. It could also eliminate layers of bureaucratic micromanagement and compliance. This would be an important first step in cutting healthcare waste.