Half!

by GoozNews ~ 04 Feb 2010 10:19am

Amid all the gloomy numbers in the latest government projections for health care spending, one statistic stands out: Public sector involvement in health care this year will surpass private sector spending for the first time in U.S. history. 

The actual projections show it will only reach 49.3% of $2.57 trillion, but that assumes Congress won't throw more money at physicians at the end of this month when previously legislated cutbacks in Medicare pay are slated to go into effect. Congress can't pass health care reform, but spending more on physicians (mean salary for cardiologists and radiologists in 2009 was over $400,000) has unusual bipartisan support.

What's driving the growing public role is no mystery. With unemployment at 10 percent and underemployment widespread, millions of Americans have lost employer-based coverage and now must rely on public sector programs. Even where people remain employed, their firms can no longer afford skyrocketing premiums and thus are abandoning or cutting back on coverage.

And there's no end in sight to those trends, even with an improving economy. Health care spending, which surged to 17.3% of gross domestic product in 2009 from 16.2 percent in 2008,  the largest single jump in the history of government recordkeeping, is slated to rise to 19.3% in 2019, a year when the public sector will account for 51.9% of the $4.49 trillion health care economy. And that's without paying physicians more.

Here's another way to look at it: In 2019, U.S. government agencies at the state and federal level ALONE will spend 10% of GDP on health. That's a greater share of economic activity than many other highly industrialized nations that insure everyone, yet the U.S. will still have one in six or seven people without any coverage at all at some point during the year.

 

Comments

Dear Merrill: Why does your

Dear Merrill:

Why does your estimate of the public contribution to health care expenditures ignore the health insurance provided to public employees and their dependents at the federal, state, and local levels, and the tax expenditure for the public subsidy to private employers who use pre-tax dollars to purchase employer-sponsored health insurance for their employees?  Stephie Woolhandler and David Himmelstein estimate this to add another 15%. Steffie Woolhandler and David U. Himmelstein Paying For National Health Insurance—And Not Getting It Taxes pay for a larger share of U.S. health care than most Americans think they do. Health Affairs, July/August 2002; 21(4): 88-98.

I work from CMS numbers.

I work from CMS numbers. While it's true that tax dollars that pay for the insurance of public sector workers are "public" monies, they flow through insurance industry balance sheets and tbe public sector has no control over the spending in the same way that it has over Medicare and Medicaid. Ditto for the tax subsidy that allows employers to buy insurance with pre-tax dollars. But your larger point is valid: if we included all forms of public support for health care, the actual total would probably be close to 65 percent.