Healthcare costs! Recently I’ve had a number of conversations with clients on the subject of our country’s healthcare costs — and how healthcare is impacting the federal budget. However, I’ve found that these conversations tend to reflect each person’s political views rather than focus on actual facts and figures. Therefore, I decided to find some detailed information on this subject. And, in the process, I found a report written on April 13, 2015 titled, “The Federal Role in Healthcare: Where Your Taxes Go!” This report is interesting, informative, politically unbiased, and it includes a comparison of United States healthcare costs to the healthcare costs of six other countries.
The report was written by Paul Keckley, Ph.D., a Managing Director at Navigant Healthcare’s NAVIGANT Center for HEALTHCARE RESEARCH and POLICY ANALYSIS. Paul’s background includes multiple boardroom duties, government consulting roles at the highest levels, he’s published three books and written more than 250 articles, and he publishes a weekly newsletter, “Pulse.” I think you’ll appreciate Paul’s unbiased viewpoint as he discusses where we are and where we may be going with the U.S. healthcare system. I think you’ll find it very interesting.
By Paul Keckley, Ph.D., Navigant Healthcare, (April 13, 2015)
This week, many of us will submit our Federal Income Tax forms to the Internal Revenue Service, continuing a national mandate since the passage of the 16th Amendment to the Constitution in 1913. Last year, 86% of 137,887,000 filers used e-filing and the average refund was $2,861.
Individual taxes are 42% of the $3.0 trillion the federal government took in last year: an additional 40% comes from payroll taxes, 9% from corporate taxes, 3% from excise taxes and 6% from others. The official tax rates across our 7 major brackets range from 10% to 39.6%, but after deductions and other adjustments, the effective rate is 0% to 20.1%.
And of the $3.5 trillion the federal government spent in 2014, $1.1 trillion went to healthcare led by Medicare and Medicaid funding. So federal income taxes play a major role in funding the U.S. healthcare system in addition to out of pocket costs paid by employers and individuals for co-payments, deductibles, premiums and more.
The current debate about health reform in the U.S., and the announced goal by CMS to accelerate the transition away from fee for service payments to a performance-based alternative payment system are chapters in the short history of the U.S. health care system. Before passage of legislation authorizing federal funding for Medicare and Medicaid July 30, 1965, a payment system in health care did not exist consistently across the states. It was a retail market: doctors charged for their services, hospitals were paid either directly or through insurance that covered inpatient events, and that was it. The American Medical Association (AMA) supported hospital insurance, but resisted efforts to regulate professional and outpatient services vigorously.
In the Eisenhower, Kennedy and Johnson years, the problems of the aging and poor were perplexing to the country: the passage of the Civil Rights Act of 1964 opened the door to a desegregated health “system” but a payment mechanism did not exist at the time. LBJs “Great Society” sought to fix the problem, with Medicare and Medicaid becoming the healthcare safety nets for seniors and the poor. In the year after passage, their costs were less than 3% of total federal spending and .4% of the U.S. GDP; last year they were 31% and 17% respectively.
Click on this link to read the full report…