Most Health Care Costs in California Are Paid With Public Funds

The majority of health care expenses in California are paid for with public funds, a new study released Wednesday reports.

The research counters the popular belief that corporations and individuals bear the brunt of health care costs.

Researchers from the UCLA Center for Health Policy Research found that taxpayer dollars will pay for 71 percent of the projected $367.5 billion spent on health care in 2016 in the state.

“If public funds continue to comprise the majority of total health care expenditures, it will be increasingly important for policymakers to consider whether these public funds are being distributed efficiently and effectively, and whether alternatives such as a state single-payer system would be a more effective use of public and private health spending,” the researchers wrote.

The research found that public funds pay for a higher proportion of health care costs than previous studies have estimated. In addition to Medicaid and Medicare spending, the UCLA researchers factored in a number of public costs, including county public health expenditures and Affordable Care Act subsides.

“The public sector is the primary player in health care spending,” Gerald Kominski, director of the UCLA Center for Health Policy Research, who led the study, said in a 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 policy makers is, ‘does this fragmented approach make sense?’”

Nationally, federal and state taxpayer dollars directly paid for about 45 percent of health care expenditures in 2015 through insurance programs such as Medicaid, Medicare and programs for low-income children, according to a 2015 estimate from the Centers for Medicaid and Medicare Services.

This year in California, the state’s low-income health program known as Medi-Cal will account for the largest health care expense, roughly 27 percent of the total health care costs. Medicare spending will account for about 20 percent of health care costs.

About 29 percent, or $106.6 billion, of health care costs are expected to be paid with private funds this year. Employer-sponsored group insurance will pay about 16 percent, while enrollees will pay about 6 percent for premiums and 4 percent for out-of-pocket expenses.

The study’s authors said that a single-payer health care system — where the government, for example, pays for health care costs instead of insurers — might save money.

“For a majority of Californians, a public-run system is already the reality,” Andrea Sorensen, a graduate student at the UCLA Fielding School of Public Health, who co-authored the study, said in a release. “A single-payer system could unite all these various programs and expand them to the entire population, resulting in a more streamlined and cost-effective approach to health care spending.”

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