Report | Health

The Impact of Health Care Financing on Family Budgets

Briefing Paper #39

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The problem of high expenditures for health care is well known. In 1992, 14
percent of national income, a total of $840 billion, was used to purchase medical
care. What is not well known is who bears the burden of these high expenditures. A
quick look at the statistics shows that federal and state governments, businesses,
and insurance companies are,major funding sources. However these are just inter-
mediate sources of funds. Ultimately, individuals and families pay all health care
costs through some combination of three financing streams: out-of-pocket spending:
insurance premiums: or federal, state, and local government taxes. Even insurance
premiums paid by employers are, for the most part, offset by reductions in wages and
salaries. Thus, high expenditures for health care, while causing problems for busi-
ness and government, ultimately are borne by and have their greatest impact on the
budgets of families and individuals.

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