Entitlement Programs

An entitlement program pays benefits to anyone who meets eligibility rules set in law, so spending rises or falls with the number of people who qualify rather than with an annual appropriation. The largest began with the Social Security Act, signed on August 14, 1935, and Medicare and Medicaid, created by the Social Security Amendments signed on July 30, 1965. Others include the Supplemental Nutrition Assistance Program, unemployment insurance, veterans' disability compensation, federal civilian and military retirement, and refundable tax credits.

Entitlements are the main part of mandatory spending, which accounts for more than 60 percent of federal outlays, compared with about a quarter for discretionary programs set in annual appropriations, with the rest going to interest on the debt. Social Security, Medicare, and Medicaid alone account for nearly half of all federal spending. Social Security and Medicare's hospital insurance are financed largely by payroll taxes through trust funds, while Medicaid is funded jointly by the federal government and the states. Changing an entitlement requires a new law.

Because spending on the largest programs grows with an aging population and health costs, entitlements drive most long-term projections of federal deficits, and the latest trustees reports project that the Social Security retirement trust fund and Medicare's hospital insurance fund will be unable to pay full benefits in the early 2030s without changes. The reconciliation law signed on July 4, 2025, imposed work requirements on some Medicaid recipients starting in 2027 and tightened SNAP eligibility, changes the Congressional Budget Office projected would reduce federal spending and coverage. Supporters of reform say the programs must be restrained to control debt, while defenders say benefits are earned protections that should be preserved by raising revenue.