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1 Patrick Fleenor, Three Decades of Government-Financed Health Care in the United States 1 (1994)

handle is hein.taxfoundation/srdixz0001 and id is 1 raw text is: TAX TION FOUNDATION August 1994 Number 38 Three Decades of Government-Financed Health Care in the United States Congress is currently debating legislation to revamp the nation's health care system. Provisions in these bills would require that employers provide health insurance for their employees and would expand the federal Medicare and Medicaid programs. Much of the demand for reform stems from the fact that health care spending has accounted for a growing share of the nation's Gross Domestic Product (GI)P) over the last several decades. Figure I illustrates this trend. It graphs national health expenditures as a percent of GD)P since 1950. Figure / National Health Expenditures as a Percent of GDP, 1950-2000 20% to t go to r. F- o CC g to 0 Source: I[dX FotIndalion calCttlation lsing Commerce Dcpartmcnt and H calth Care Financing Administration data. While talk of employer mandates, addi- tional payroll taxes, and taxes on health insurance premiums may sound new to most Americans, the federal government's involve- mcnt in the U.S. health care system is not. Since the mid-1960s it has become increasingly involved in the nation's health care system. Today the federal government is the largest single payer of the nation's health care hills. Such obligations arc putting increased pres- sure on the federal budget. Currently health care spending accounts for over 20 percent of all federal expenditures. By the year 2000 this figure is expected to rise to 30 percent. Federal involvement has also led to an in- creased reliance on third party payment of routine medical expenses, a trend many economists find disturbing. The Growth of Federal Involvement in Health Care Since 1965 Prior to 1965 the federal government had played a relatively minor role in financing Americans' health care. It undertook certain public health care activities, such as medical research and control of infectious disease. It also provided for the health care of certain individuals, such as federal employees, active duty military personnel, and veterans. Figure 2 graphs national health expenditures by source since 1960. Expenditures are given in 1994 dollars so that comparisons can be made between the years. In 1960, national expendi- turcs on health care totaled $132.9 billion, or 5.3 percent of (;DP. The bulk of these expen- ditures, 75.6 percent or $100.5 billion, were paid by private sources such as individuals, ]By, Patrick fleenor hconolnist Tax Iotlndation