- This year, 71% ($260.9 billion) of California’s healthcare costs will be paid for by taxpayers, according to a new analysis by the UCLA Center for Health Policy Research.
- Medi-Cal/Healthy Families accounts for the biggest chunk of public health funding, 27%, followed by Medicare at 20%. Employer-based insurance subsidies comprise another 12% of public spending.
- If public spending continues to dominate healthcare, the authors say a state single-payer system may be a more effective use of both public and private funds.
While people assume the U.S. healthcare system is largely funded through private dollars, that isn’t the case.
“The public sector is the primary player in health care spending,” Gerald Kominski, director of the UCLA Center for Policy Research and the study’s lead author, said in a press release. “But monies are disbursed in a fragmented way through numerous different entities, each of which has their own system and way of doing things. The question for policymakers is, ‘does this fragmented approach make sense?’”
In addition to Medicaid, Medicare and employer subsidies, there were a host of other publicly funded programs such as county-level public health expenditures and Veterans Administration expenditures. Private funds paid for the remaining 29% ($106.6 billion).
One factor driving up California’s costs is its large Medicaid population. The state’s Medi-Cal expansion was “much larger … than anyone expected,” Kominski told Kaiser Health News.
Kominski said most healthcare in California was financed privately through employer-sponsored plans before the Affordable Care Act. Now many more people are covered by public programs.
The aging population is also contributing to greater public spending on healthcare, with people 65+ being covered by Medicare.
“As health care reform continues to take effect, it will be important to monitor the public versus private contributions to state health care expenditures to ensure that funds are being distributed both efficiently and effectively,” the researchers write.