August 1, 1994

Three Decades of Government-Financed Health Care in the United States

Download Special Report No. 38

Special Report No. 38

Executive Summary 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 (GDP) over the last several decades.

While talk of employer mandates, additional payroll taxes, and taxes on health insurance premiums may sound new to most Americans, the federal government’s involvement 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 bills. Such obligations are putting increased pressure on the federal budget. Currently healthcare 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 increased reliance on third party payment of routine medical expenses, a trend many economists find disturbing.

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