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Controlling Government Spending

Americans are spending $4 trillion per year—about $12,000 per American—on health care. This is more than twice per capita what most other developed countries spend.

Health care has become the largest component of federal spending, now even exceeding Social Security—and double the spending on national defense. It is the fastest growing major area of the federal budget, and is driving the rapid growth in federal deficits and national debt.

Projected spending chart

And health care is typically the 2nd largest component of state government spending, too—after education (though in some states health spending, primarily Medicaid-related, now exceeds education).

Why is the government so involved in health care?  Some of the reasons include:

  • There is a substantial public interest in people being healthy and able to work.
  • Health care costs are extremely unpredictable for families, and can often suddenly become so high that they far exceed family budgets & savings.  They lead to over ½ million personal bankruptcies each year.  (In fact, 2/3 of people filing for bankruptcy pre-pandemic cited medical issues as a key contributor.)
  • Health care costs have grown much faster than family incomes (a key cause of the Affordable Care Act aka Obamacare).
  • When people retire, they cannot afford to cover their increasing health care costs as they age on a low fixed income (hence: the need for Medicare).
  • Lower-income families often have worse-than-average health, yet cannot afford to pay for their health care costs (hence: Medicaid).

The government role in health care continues to grow—thanks to Medicaid (“free” health care for low-income families, operating under AHCCCS, Medi-Cal & many other state-specific names), Medicare, the Affordable Care Act (“Obamacare”), veterans benefits (“the VA”), military & other government employees, IRS employer health insurance tax breaks, etc. (Yes, even employer health benefit spending is heavily subsidized by the government/taxpayers—through tax deductions.)

To put it bluntly: current and especially (thanks to federal deficits & debt) future taxpayers—in other words, our children, grandchildren, and great-grandchildren—will end up paying what we are choosing not to pay, driven by preventable chronic diseases that we are choosing not to prevent.

Credit card

Ever-increasing deficit-fueled federal health care spending, including major new public-private health insurance subsidies (“Obamacare”), plus massive federal tax cuts every 15 or so years (to increase working- and middle-class disposable income), have been essential to protect families’ increasingly pressured household budgets.

But the size & cost of deficits have grown so high, that higher spending and/or major tax cuts are becoming less and less viable.

Health Care “Reforms” Not Moving the Needle

Another part of “kicking the can further down the road” is the annual health care “reform” distraction. 

Each year there is a promised “silver bullet” policy “solution”—which we are assured will reduce health costs, without any real cost or effort on our part.

Ship sinking graphic

This happy talk always disappoints in the end, with no discernible improvement in our health costs.  Yet the empty promises aid & abet our political system and society to postpone dealing with the most preventable large-scale root causes: unhealthy habits.

The financial risks for the public continue to mount. Health cost increases remain high, while wage & salary increases are not closing the long-term gap between incomes & health care costs.

Meanwhile, we rightly congratulate ourselves for 50+ years of continued progress in reducing smoking—which in stark contrast to inactivity & unhealthy nutrition, we have been working very hard to change.

Notes on Chronic/Health Costs, Incomes, Taxes

Read More: Why State and not Federal?

More Info:   Protecting Family Budgets