US: Health System Financing - National Systems

“In 2019 the federal government and households accounted for the largest shares of national health expenditures (29 percent and 28 percent, respectively), followed by private businesses (19 percent), state and local governments (16 percent), and other private revenues (7 percent) (exhibit 4). The fairly stable growth rate of 4.6 percent in overall national health expenditures in 2019 (exhibit 1) was a result of faster growth in health care spending by the federal government and other private revenues, offset by slower growth in spending by private businesses, state and local governments, and households.

“For the federal government, spending for health care increased 5.8 percent in 2019, up from a rate of 5.4 percent in 2018 (exhibit 4). The slightly faster growth in 2019 was driven mainly by growth in federal general revenue and Medicare net Trust Fund expenditures (a 32 percent share of federal government health spending), which increased 9.4 percent in 2019 after growth of 6.1 percent in 2018 (data not shown). Faster growth in federal general revenue spending in 2019 was the result of faster growth in overall Medicare expenditures, which are also financed by payroll taxes and premium income. Premium income collected for the Medicare Part B and Part D programs grew at a slower rate in 2019 than in 2018, causing more revenue to be drawn from the general fund. Growth in the federal portion of Medicaid payments (a 35 percent share) and in the payments for other federal health insurance programs (a 23 percent share) also contributed to the acceleration in expenditure growth, as their spending increased 4.1 percent and 5.9 percent, respectively (data not shown).”

Source: Anne B. Martin, Micah Hartman, David Lassman, Aaron Catlin, and The National Health Expenditure Accounts Team. National Health Care Spending In 2019: Steady Growth For The Fourth Consecutive Year
Health Affairs (2021). https://doi.org/10.1377/hlthaff.2020.02022
https://www.healthaffairs.org/doi/abs/10.1377/hlthaff.2020.02022

“Health care spending by households increased 4.5 percent in 2019—similar to the rate of 4.8 percent in 2018 (exhibit 4). Out-of-pocket health spending and households’ contributions to employer-sponsored private health insurance premiums accounted for the largest shares of spending in this category, at 38 percent and 27 percent, respectively (data not shown). Out-of-pocket health spending increased 4.6 percent in 2019 after growth of 3.8 percent in 2018 (exhibit 1), whereas households’ contributions to employer sponsored private health insurance premiums increased 6.3 percent in 2019 compared with growth of 2.9 percent in 2018 (data not shown). Growth slowed for other components of household health spending, offsetting the accelerations in out-of-pocket spending and contributions to private health insurance premiums. These other components include premiums paid by individuals to the Medicare Supplementary Medical Insurance Trust Fund, spending on the medical portion of property and casualty insurance, spending on direct-purchase insurance, and employees’ payroll taxes and voluntary premiums paid to the Medicare Hospital Insurance Trust Fund, which together account for 35 percent of total household health spending (data not shown).”

“The growth rate for health care spending by private businesses was slower in 2019 (3.7 percent) than in 2018 (5.7 percent) and was the slowest rate of growth since 2015 (exhibit 4). Contributions by private businesses to employer-sponsored private health insurance premiums accounted for the largest share of private businesses’ health spending in 2019 (76 percent); such contributions in 2019 increased 3.9 percent, which was a slower rate than in 2018, when growth was 6.3 percent (data not shown).

“Growth in state and local government spending slowed from 3.3 percent in 2018 to 2.4 percent in 2019 (exhibit 4), driven by slower growth in state and local Medicaid spending (a 37 percent share; data not shown). Medicaid state and local spending grew 1.0 percent in 2019, which was a slower rate than in 2018 (2.6 percent) and 2017 (5.4 percent) (exhibit 1). The faster growth in 2017 was attributable in part to the initial requirement that states fund 5 percent of the costs for the expansion population.”

Table 18 - Political Economic Research Institute 2018 report on Medicare For All

“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.
www.peri.umass.edu/publication/item/1127-economic-analysis-of-medicare-for-all

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 several other nations.

Page last updated Jan. 11, 2021 by Doug McVay, Editor.