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   Government Funds 60% of U.S. Healthcare Costs


Government Funds 60% of U.S. Healthcare Costs

Harvard Study Finds Government Health Spending in U.S. Higher than in Any Other Nation

“We Pay for National Health Insurance but Don’t Get It”

Government expenditures accounted for 59.8% of total US health care costs in 1999, according to a Harvard Medical School study published in the July/August 2002 issue of the journal Health Affairs. At $2,604 per capita, government spending was the highest of any nation—including those with national health insurance. The study found that government health spending in the U.S. exceeded total health spending (government plus private) in every other country except Switzerland. (The estimated total US health spending for 2002 is $5,427 per capita, with government’s share being $3,245.)

The study analyzed data on spending for government health programs like Medicare, Medicaid and the Veterans Administration ($548.7 billion in 1999), as well as two categories that have previously been overlooked in calculating government health costs. These are: (1) Expenditures to buy private insurance for government employees, such as members of Congress, firemen and school teachers, at a cost of $65.6 billion in 1999.; and (2) tax subsidies for private coverage, which totaled $109.6 billion in 1999. The study noted that most of these tax subsidies go to the wealthiest Americans. The study found that government’s share of expenditures has nearly doubled since 1965, with tax subsidies and public employee benefit costs increasing fastest.

In 1999, a family of four with average health costs spent $7,016 for their own health expenses and premiums (including what their employer paid). In addition, they paid $10,416 in health care taxes; $1,578 for tax subsidies, $943 for government workers’ coverage, and $7,895 for government health programs like Medicare and Medicaid. Even many uninsured families pay thousands of dollars in taxes for the health care of others.

Dr. Steffie Woolhandler, a study author and an associate professor of medicine at Harvard, noted: “We pay the world’s highest health care taxes. But much of the money is squandered. The wealthy get tax breaks. And HMOs and drug companies pocket billions in profits at the taxpayers’ expense. But politicians claim we can’t afford universal coverage. Every other developed nation has national health insurance. We already pay for it, but we don’t get it.”

Dr. David Himmelstein, study co-author and a co-founder of Physicians for a National Health Program, commented: “Our study shows that universal coverage is affordable—without a big tax increase. Government already spends nearly enough, but its spending it wrong. National health insurance doesn’t mean spending more; it means spending wisely. We spend over $309 billion each year on paperwork in insurance companies, hospitals and doctors’ office—at least half of which could be saved through national health insurance. We spend $150 billion on medications, at prices 50% higher than Canadians pay for the same drugs. By slashing bureaucracy and drug prices we could save enough to cover all of the uninsured and improve coverage for the rest of us.”

“It’s an outrage that the American people pay sky high-health care taxes—but 40 million of them are uninsured,” said Dr. Quentin Young, past president of the American Public Health Association. “Health care should be every American’s right, just like schools, roads, defense, police and fire protection.”

Chicago-based Physicians for a National Health Program, which supports non-profit national health insurance, has over 9,500 physician members. For more information, call (312)782-6006 or visit

To view the entire article in Health Affairs, click here.

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This story was published on September 4, 2002.
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