HHS's Spending Spree

In 2018, payments for Medicaid switched to a block grant system for certain states, including the largest state Medicaid system: California.

Rather than paying varying amounts based on usage each year, the block grant approach would force the states to ensure costs were kept within the total grant or else payments would have to come from the state’s coffers rather than the federal government’s.

Yet even with block grants limiting Medicaid payments to state governments—topping out at $704 billion in 2021 based on USA Spending data. Gross costs for Health and Human Services (HHS)—the agency that contains the Centers for Medicare & Medicaid Services (CMS)—has continued to grow, adding another $200 billion a year since then, almost reaching $1.9 trillion in 2023 according to U.S. Treasury financial reports.

Net costs for running the agency were $1.7 trillion in 2023, easily beating out the Department of Defense ($1.5 trillion) and Social Security ($1.3 trillion) for the title of most expensive agency, while still not providing health care for half of the population.

The Pandemic, Refugees, HIV, Cancer, and Alzheimer’s

Some of that is due to increasing Medicare and Medicaid costs. Even with the use of block grants, costs still increase because of inflation and anything not limited by block grants. HHS’s financial report details how net costs for CMS increased by $116.1 billion from 2022 to 2023 related to Medicare and Medicaid.

Some of the cost increases are due to the pandemic. But while COVID Disaster Emergency Fund spending for the agency reached $77 billion in 2021, it has declined since and is now only at $17 billion a year.

But that is just the Disaster Emergency Fund for COVID. HHS COVID-19 awards totaled $159 billion, most of which were obligated in 2020 and 2021, with its own website to tracking the spending.

Tracking government spending on healthcare related to COVID is not one-sided. As the federal government spent large sums on the vaccine and prevention, they might also have seen a decline in Medicare/Medicaid spending on medical procedures that were limited because of the pandemic in the same way that private insurers saw a substantial drop in payments in 2020 and 2021.

HHS would also see a large growth in assets over that time, going from $650 billion in 2019 to almost twice that in 2023—$1.18 trillion. Much of that was related to COVID spending:

[Fund Balance with Treasury] had an increase of $196.5 billion or 38 percent over FY 2020, which is primarily due to the Public Health and Social Services Emergency Fund (PHSSEF) for COVID-19 and additional COVID-19 relief funding received in FY 2021 from the Coronavirus Response and Relief Supplemental Appropriations Act, 2021 and the ARP.

Large Grant Spending

But outside of COVID, there’s also a wide variety of grants and contracts going to universities, nonprofits, and businesses that began pre-pandemic but continued past the pandemic that are a continuing budgetary culprit.

Based on USA Spending data in 2018, outside spending by HHS—not including payments to governments such as the block grants—was less than $30 billion. In 2023 it was over $100 billion a year.

Investigative Economics previously detailed how a large flow of HHS cash started going to LGBT-themed projects beginning in 2021. Grants to universities would include an additional $250 to $350 million new spending on research for HIV/AIDS.

But for 2022 alone, $33.62 billion in grants mention HIV, $26.4 billion in grants mention cancer, and $10.7 billion mention Alzheimer’s disease.

There’s also been large spending by HHS on border issues, like that of unaccompanied minors.

According to a story from the Free Press, revenue for nonprofits working on border issues that get the lion’s share of their finds from the U.S. government—like that of Global Refuge, Southwest Key Programs, and Family Endeavors, Inc.—went from $597 million in 2019 to $2 billion by 2022. Some of it is directed towards housing but other projects include pet therapy and horticulture therapy.

Within that, contracts related to unaccompanied minors would swoon to $1.4 billion in 2023. An additional $13 to $25 billion per year would be spent on businesses aiding the refugee effort—oddly done through HHS rather than other agencies closer to immigration like the Department of Homeland Security. A multi-year $3.5 billion contract would go to Rapid Deployment, Inc. for refugee facilities setup.