Who pays for health care?

How expensive is American health care per person?

  • For someone working a full time job, 2080 hours per year, around $5 per hour is spent on health care.
  • This data reminds us that American health care is unnecessarily expensive and that all of us bear the burden of its excessive cost.

How do we seem to share the costs of health care?

Most commonly, people think of health care as being paid by:

  • Employer-purchased insurance: 49% of Americans
  • Public insurance paid for through government programs, the two biggest being Medicare and Medicaid: 35% of Americans
  • Individuals with non-group health insurance: 7% of Americans
  • Uninsured: 9% of Americans

How do we really share the costs?

Looking at the relative size of insurance programs by the number covered creates a distorted view of who pays. To make the most important point, Medicare and Medicaid cover fewer people than employment-based insurance, but those people are older, poorer, and sicker.

Who really pays for employment-based health care?

Quick answer: not employers. Workers and taxpayers are the main payers for health care. On average, employees pay 22% of their premiums in employer-provided health plans. High wage workers are much more likely to get insurance through their jobs than lower paid workers. If employers did not pay such high health care premiums, most economists believe they would pay their workers more. Essentially, health care costs translate into lower wages for employees.

Since health care benefits are tax-deductible, unlike wages, companies and workers do not pay taxes on them. For example, if Joe’s base salary is $30,000, and his health plan costs the company $6,000 – a total of $36,000 – Joe’s company is only paying taxes on $30,000. This tax subsidy represented a loss of approximately $250 billion in federal tax revenue from employers in 2013.

What percent of health care spending is really paid for by taxpayers?

In addition to the best-known public programs, Medicare and Medicaid, federal tax funds also support coverage for active military and veterans, Native Americans, and others. There are about 2.75 million federal workers, 5 million state workers, and 14.5 million local workers who receive coverage through federal tax funds. So over 20 million more Americans with employment-based coverage actually have that coverage paid for through tax revenues. Using average health insurance premiums, this would mean that taxes paying for health care rise from 37% to 64% of total health care spending. Updated 6/1/2018