As health care continues to represent a larger portion of U.S. gross domestic product, the federal government’s ability to finance that expenditure through tax revenues has relatively declined. Corporate taxes as a percent of GDP peaked at 2.6% in 2007. In the aftermath of the global financial crisis that proportion fell to 1% in 2009 and recovered to 1.9% in 2015. In 2018, the last year for which we have data, it was again at 2009’s level of 1%.
Corporate tax revenue is not the only source of funding for the government, nor is it the largest, making up 7% of revenue according to the Tax Policy Center. Certain health care programs receive assistance through payroll taxes and the bulk of the remaining federal revenue, 50% of total, comes from individual income taxes. Individual income tax receipts have shown a similar pattern to corporate tax receipts.
As health care costs rise and the government becomes more limited in its willingness or ability to fund the increase, the balance will fall to patients, millions of whom are facing financial hardships as a result of the pandemic. Last week for the 23rd week out of the last 24, we saw over 1 million people file for first-time unemployment benefits.
As government’s and patients’ ability to finance care diminishes, the health care providers and payors may have to bear the increased burden of cost.