Paying for national health insurance--and not getting it

Abstract

The threat of steep tax hikes has torpedoed the debate over national health insurance. Yet according to our calculations, the current tax-financed share of health spending is far higher than most people think: 59.8 percent. This figure (which is about fifteen percentage points higher than the official Centers for Medicare and Medicaid Services [CMS] estimate) includes health care-related tax subsidies and public employees' health benefits, neither of which are classified as public expenditures in the CMS accounting framework. U.S. tax-financed health spending is now the highest in the world. Indeed, our tax-financed costs exceed total costs in every nation except Switzerland. But the sub rosa character of much tax-financed health spending in the United States obscures its regressivity. Public spending for care of the poor, elderly, and disabled is hotly debated and intensely scrutinized. But tax subsidies that accrue mostly to the affluent and health benefits for middle-class government workers are mostly below the radar screen. National health insurance would require smaller tax increases than most people imagine and would make government's role in financing care more visible and explicit.