The federal government spent more on interest than on Medicare in fiscal 2026. Interest on the national debt cost $1.143 trillion, against $1.069 trillion for Medicare, according to the Congressional Budget Office.
Both figures come from CBO’s Monthly Budget Review for September, released October 8. The same report puts the fiscal 2026 deficit at $1.993 trillion, $218 billion wider than the year before, and it labels all of the full-year numbers preliminary.
For anyone who counts on Medicare, the comparison does not change a premium, a benefit or a coverage rule. What it shows is where the budget’s flexibility went. A dollar spent on interest buys nothing for a program, and with the interest line now larger than the entire net cost of Medicare, every future debate over Medicare, Social Security and taxes is held against a bill that Congress cannot negotiate in a given year.
Fiscal 2027 began October 1, so the interest meter is already running against a debt that stood at $40.273 trillion on October 6.
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How interest grew $115 billion in one year
Net interest on the public debt was $1,028 billion in fiscal 2025 and $1,143 billion in fiscal 2026, an increase of $115 billion, or 11 percent. CBO gives two reasons. The debt was larger than it was a year earlier, and long-term interest rates were higher. Lower short-term rates offset part of the increase, but not enough to hold the total down.
Those two forces compound. A bigger debt means more bonds to pay interest on. Higher long-term rates mean the Treasury pays more each time it replaces maturing debt with new bonds. Neither requires any new spending decision by Congress, which is why the line grows even in a year when lawmakers pass no new programs.
Medicare’s $1.069 trillion, and why it grew too
Medicare, counted net of offsetting receipts such as premiums, cost $1,069 billion in fiscal 2026, up $77 billion, or 8 percent, from $992 billion. CBO says the rise reflects increased enrollment and higher payment rates for services. In percentage terms Medicare grew more slowly than interest, which rose 11 percent, and the gap between the two lines opened to $74 billion.
The other big health program grew at the same pace as Medicare. Medicaid reached $723 billion, up $55 billion, or 8 percent, largely because of rising costs per enrollee. Social Security benefits reached $1,654 billion, up $86 billion, or 5 percent. Interest therefore now sits between Medicare and Social Security in the ranking of the largest budget lines, with only Social Security larger.
Defense offers another yardstick. Military spending at the Defense Department was $916 billion in fiscal 2026, up $48 billion, or 5 percent, which leaves the interest bill $227 billion larger. Against revenue, the $1,143 billion of interest equals about 21 percent of the $5,403 billion the government collected, or roughly 40 percent of the $2,844 billion raised through individual income taxes. Those ratios are calculations from CBO’s table, not figures CBO publishes.
The $1.993 trillion deficit behind it
Interest is a result of past deficits as well as a cause of future ones. The fiscal 2026 gap of $1,993 billion compares with $1,775 billion in fiscal 2025, a 12 percent increase. Revenues rose $169 billion, or 3 percent, to $5,403 billion, while outlays rose $386 billion, or 6 percent, to $7,396 billion.
Put differently, interest alone accounts for about 15 percent of fiscal 2026 outlays and for $115 billion of the $386 billion increase in spending, roughly 30 percent of the growth. Those shares are arithmetic on CBO’s table rather than CBO’s own findings, but they show how much of the added spending came from the cost of the debt itself.
What the debt stands at now
Treasury’s Debt to the Penny data show total public debt of $40.273 trillion on October 6. Of that, $32.440 trillion was held by the public, the portion that carries interest costs most directly tied to market rates.
CBO’s separate report on interest-rate risk, published the same day as the budget review, measures that held-by-the-public debt against the size of the economy. It puts the ratio at 100.6 percent of gross domestic product in 2026 and at 120.2 percent in 2036 under the agency’s baseline. In that report CBO also runs two higher-rate scenarios, and in the milder one, with rates half a percentage point above baseline, cumulative deficits through 2036 grow by $1.9 trillion.
Tracking the interest bill on official data
The two documents above are free and public. The budget review’s landing page carries the summary and the full table, where “Net interest on the public debt” and “Medicare” appear in the outlays section with prior-year and current-year columns. The debt figures update on Treasury’s data site, so the October 6 total will not stay current for long.
Three numbers are worth following into fiscal 2027: the interest line, which was $1,143 billion; the Medicare line, which was $1,069 billion; and the deficit, which was $1,993 billion. If interest keeps growing near the 11 percent pace, the distance between it and Medicare widens. If long-term rates ease and the deficit narrows, the reverse becomes possible. CBO’s monthly reports show which way it is moving.
The anchor for all of it is CBO’s September table: net interest of $1,143 billion against Medicare’s $1,069 billion.
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This article was produced with AI assistance and reviewed by The Financial Wire’s editorial team.
Warren Cohen is a finance writer based in Phoenix, Arizona, covering personal finance topics including credit, banking, and beginner investing. He earned his degree in business administration from Arizona State University and began his career working in consumer finance, where he gained direct experience with lending and credit systems. He now writes for personal finance websites and fintech platforms, focusing on clear, practical content that helps readers make informed financial decisions.
