Options Related to Health

The federal government’s net outlays for mandatory health care programs, combined with the subsidies for health care that are conveyed through reductions in federal taxes, exceeded $1.0 trillion in fiscal year 2013, CBO estimates. Net outlays for Medicare and Medicaid, the two largest federal health care programs, totaled an estimated $760 billion, roughly one-quarter of all federal spending in 2013. Other mandatory health care programs include the Children’s Health Insurance Program (CHIP), the Federal Employees Health Benefits program for civilian retirees, and the TRICARE for Life program for military retirees. In addition, the federal tax code gives preferential treatment to payments for health insurance and health care, primarily through the exclusion of premiums for employment-based health insurance from income and payroll taxes. CBO estimates that the tax expenditure for that exclusion (accounting for income and payroll taxes together) was about $250 billion in 2013. The federal government also supports many health programs that are funded through annual discretionary appropriations: Taken together, funding for public health activities, health and health care research initiatives, health care programs for veterans, and certain other health-related activities totaled about $115 billion in 2013. (In addition, the federal government makes contributions for health insurance premiums for active civilian and military workers, but that funding is part of each agency’s budget and is not included in that figure.)