“In 2021 the federal government accounted for the largest share of national health spending (34 percent). Although lower than its share of 36 percent in 2020 (the highest recorded since 1987), this was still much larger than the federal government’s share of 29 percent every year from 2015 through 2019. The second-largest sponsor share in 2021 was from households (27 percent), followed by private businesses (17 percent), state and local governments (15 percent), and other private revenues (7 percent) (exhibit 2).

“The slowdown in overall national health expenditure growth in 2021 (from 10.3 percent in 2020 to 2.7 percent in 2021) was driven by a 3.5 percent decline in health care spending by the federal government after the record high growth of 36.8 percent in 2020. In contrast, the other sponsors of health care all experienced faster spending growth in 2021 after declines or slow growth in 2020 (exhibit 2).

“In 2021 the decline in federal government health spending was driven by a 62.7 percent decrease in spending under other federal programs associated with a reduction in federal COVID-19 funding, although spending in this category was still at a level much greater than in 2019 and before (exhibit 3). In addition, but to a lesser extent, the overall decline in federal government health expenditures was affected by a decrease in federal public health spending (-41.9 percent) and slower growth in the federal portion of Medicaid payments (from 18.8 percent in 2020 to 11.4 percent in 2021). Partially offsetting some of the decline in federal spending associated with supplemental COVID-19 funding was an increase in Marketplace tax credits and subsidies, which grew 19.4 percent in 2021 and reached $60 billion (data not shown).”

“Health care spending by households grew 6.1 percent in 2021, increasing from a growthrate of 1.2 percent in 2020 (exhibit 2). The largest share of household health spending (38 percent; data not shown) was out-of-pocket spending, which increased 10.4 percent in 2021 after a decline of 2.6 percent in 2020 (exhibit 3). This faster growth was primarily driven by an acceleration in out-of-pocket spending growth for dental services, durable medical equipment, other nondurable medical products, and physician and clinical services. The purchase of many of these goods and services declined sharply in 2020 and rebounded in 2021. Households’ contributions to employer-sponsored private health insurance premiums (which constituted the second-largest share of household health spending, at 26 percent) increased 2.8 percent in 2021, the same rate of growth as in 2020 (data not shown).”

“Private businesses’ health care spending increased 6.5 percent in 2021 after decreasing by 2.9 percent in 2020 (exhibit 2). The largest spending share (75 percent) was contributions to employer-sponsored private health insurance premiums, which grew 6.5 percent in 2021 after a decline of 3.0 percent in 2020 (data not shown). The 2021 increase stemmed from higher per enrollee spending after the historically low use of health care goods and services by employees in 2020. In addition, although enrollment in employer-sponsored private health insurance plans declined in 2021 (by 0.3 percent), it was a smaller decline than the 2020 decrease of 1.3 percent (data not shown).”

“Health care expenditures financed by state and local governments increased 5.8 percent in 2021 after a decline of 1.9 percent in 2020 (exhibit 2). The largest share of state and local expenditures (35 percent) was attributable to Medicaid (data not shown), which increased 4.6 percent in 2021 after a declineof 7.0percentin2020 (exhibit 3)— a decrease that was in large part the result of a 6.2-percentage-point increase in the federal medical assistance percentage resulting fromthe public health emergency.6 State and local government contributions to employer-sponsored private health insurance premiums (a 29 percent share) increased 7.3 percent in 2021 after a 4.4 percent decrease in 2020 (data not shown).”

“Overall then, as Table 18 shows, our bottom-line figure for all existing public funding sources available to finance Medicare for All is $1.88 trillion (rounded down from $1.884 trillion). This figure includes, again, 1) all available public insurance funds; 2) funds now provided for other public third-party payers; and 3) federal tax subsidies as well as health insurance spending on federal government employees.

“Given our estimate that the costs of providing universal coverage under Medicare for All would be $2.93 trillion in 2017, we can then conclude that, for the U.S. economy as of 2017, we would need to raise an additional $1.05 trillion in new taxes to fully fund Medicare for All. We show our simple derivation of this figure in Table 19.

“Of course, these new tax revenues would not constitute a net additional cost or spending burden on the U.S. economy. These funds would rather be serving to substitute for the loss of revenue into the U.S. health care system that presently come from existing private revenue sources— i.e. primarily private health insurance and out-of-pocket expenditures. These private revenue sources would no longer operate.”

Source: Pollin R, Heintz J, Arno P, Wicks-Lim J, Ash M. Economic analysis of Medicare for All. Research report. Political Economics Research Institute. 30 November 2018. 

Health Systems Facts is a project of the Real Reporting Foundation. We provide reliable statistics and other data from authoritative sources regarding health systems in the US and sixteen other nations.

Page last updated Dec. 23, 2022 by Doug McVay, Editor.