Public funding covers 71 percent of healthcare spending in California

While politicians consider public healthcare options, the most-populous state in the U.S. is already inching towards a public system.

A new study from the UCLA Center for Health Policy Research said 71 percent of healthcare expenditures will be paid for by public funds in 2016. That’s far above the 45 percent directly paid for through Medicare, Medicaid, and versions of the Children’s Health Insurance Program, according to a 2015 CMS analysis, but the UCLA analysis factored in additional public spending, like Affordable Care Act (ACA) subsidies and tax incentives for employer-sponsored plans.

“The public sector is the primary player in healthcare spending,” said the center’s director, Gerald Kominski, PhD, who was the lead author of the study. “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 study projected statewide healthcare costs for 2016 to be $367.5 billion, with $260.9 billion being split among several different kinds of public funding. The biggest shares come from:

• Medi-Cal/Healthy Families expenses: $100.2 billion (combining $62.8 billion from federal funding and the state’s $37.4 billion share)
• Medicare: $74.7 billion
• Tax subsidies for employer-sponsored insurance: $44 billion
• Government employer premium contributions: 13.1 billion

ACA subsidies account for $8.9 billion in spending.

One possible explanation the study offered is California has more people enrolled in Medicaid, almost 33 percent of the state’s population, which is notably higher than the national average.

The remaining 29 percent of healthcare expenditures comes from private funding, with 16 percent of that $106.6 billion coming from employer-sponsored group insurance and another 6 percent coming from what enrollees pay for premiums.

The study’s conclusion is the assumption that healthcare expenditures in U.S. are primarily funded by private payers is incorrect, which may mean a single-payer system may be feasible in the near future at the state or federal level.

“If public funds continue to comprise the majority of total healthcare 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 study said.