The Distribution of the Burden of US Health Care Financing

Abstract

The complex financing system that supports health care spending in the US makes estimation of the incidence of financing both daunting and important. A significant portion of financing is embedded in the tax system at all levels of government, while tax expenditures that subsidize private purchases implicitly transfer a large share of financing from private to public revenue sources. We compute and describe the final incidence of financing health care by major component and in total. We use the Kakwani measure of progressivity and find the overall incidence of US health care financing to be regressive although less so than in earlier years. This change is due in part to an increased federal role. We provide detail as to our methods and assumptions for benchmarking and assessment of the equity implications of financing health care in the future.