Question: where is the bulk of medicaid funds spent

title: Expenditures in the United States federal budget
text: The financial condition of the Social Security and Medicare programs remains challenging . Projected long run program costs are not sustainable under current program parameters . Social Security 's annual surpluses of tax income over expenditures are expected to fall sharply this year and to stay about constant in 2010 because of the economic recession , and to rise only briefly before declining and turning to cash flow deficits beginning in 2016 that grow as the baby boom generation retires . The deficits will be made up by redeeming trust fund assets until reserves are exhausted in 2037 , at which point tax income would be sufficient to pay about three fourths of scheduled benefits through 2083 . Medicare 's financial status is much worse . As was true in 2008 , Medicare 's Hospital Insurance ( HI ) Trust Fund is expected to pay out more in hospital benefits and other expenditures this year than it receives in taxes and other dedicated revenues . The difference will be made up by redeeming trust fund assets . Growing annual deficits are projected to exhaust HI reserves in 2017 , after which the percentage of scheduled benefits payable from tax income would decline from 81 percent in 2017 to about 50 percent in 2035 and 30 percent in 2080 . In addition , the Medicare Supplementary Medical Insurance ( SMI ) Trust Fund that pays for physician services and the prescription drug benefit will continue to require general revenue financing and charges on beneficiaries that grow substantially faster than the economy and beneficiary incomes over time .