Government Spending on Health Care in the United States

03 Feb

Many opponents of health care reform say things like “We need to reform our health care system, but we don’t need government-controlled socialized medicine coming between patients and their doctors.” When I hear people say things like that, it’s an immediate indication to me that they aren’t informed about our health care system–they don’t know how it’s structured, financed, or delivered. With that in mind, today’s post aims to educate everyone on a simple fact. When you’re done reading this, you’ll know exactly what proportion of health care spending in the United States is publicly financed.

First, we have to take a look at the various categories of health care spending and the levels of that spending (in billions of dollars) in 2007.

  • Medicare ($418)
  • Medicaid (including State share) ($340)
  • Other Public Health Programs ($189)
  • Federal, State, and Local Employee Coverage ($134)
  • All Private Health Spending ($1018)

Note that this doesn’t take into account other government funding like that for the National Institutes of Health, the Centers for Disease Control and Prevention, or the Federal Drug Administration, although some of the work done by these agencies could be considered health care. As a result, these estimates will err on the conservative side.

Still, some 52% of U.S. health care is publicly financed ($1081/$2099). But what if we take into account the federal government’s subsidy of employer-based health insurance? That adds a non-trivial $250 billion a year. That raises public spending to $1331 and total spending to $2349. The effective proportion of U.S. health care that is publicly financed then rises to 57%. Folks, that’s starting to close in on two-thirds.

So, when people talk of government involvement in health care as a thing to be avoided, I wonder if they know how involved the government already is. My hunch is they have no clue, because it seems like the idea is to keep the private system we have and avoid a public system at all costs. The thing is, our delivery system is overwhelmingly private, while our financing system is much more publicly financed than most people know. Perhaps if opponents of reform were aware of this, they’d be much more concerned about seeing effective health reform enacted rather than fighting it at all costs.

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Posted by on February 3, 2010 in Uncategorized


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