One-Third Of Americans Are On Government Healthcare

Tyler Durden's picture

Authored by Ryan McMaken via The Mises Institute,

The US House of Representatives voted today to "repeal and replace" Obamacare. Unfortunately, those who use the phrase "repeal and replace" are greatly exaggerating the extent to which the Affordable Care Act is actually repealed

While perhaps a tiny step in the right direction, the new legislation signals no departure whatsoever from the long-established trend of expanding the role of government programs in subsidizing and regulating the healthcare industry. 

Perhaps worst of all, since this is being called a "repeal," many may be prompted to think that the US health care system is a "free market" system, or that government spending has only a very small role in the industry. 

This couldn't be further from the truth. 

In fact, the US is fourth in the world in terms of per capita government spending on health care, behind only Norway, Luxembourg, and the Netherlands. That's government spending, not overall spending

In fact, those numbers from the World Health Organization (WHO) are from 2014, and with the expansion in Medicaid spending under Obamacare, it's entirely plausible that the US has moved into third place in the past two years. 


But how does this translate into actual persons on government programs? Viewed from this angle, we find that a full one-third of all Americans are either currently enrolled in a government health program, or have recently been enrolled in one. 

There are approximately 55,504,000 Americans on Medicare, which covers the elderly. But there is also an additional 74,506,000 Americans on Medicaid or CHIP. About 11 million of those are dual-enrolled, which means they're on both Medicare and Medicaid. If we pull the 11 million out of the Medicaid count to avoid double counting, we find that there is a total of 119 million Americans on government programs — or about one-third.


"But, wait!" you might say. "Obamacare expanded the number of people on Medicare, so maybe if we remove all of those people, the numbers will be smaller." 

Yes, it's true, the numbers will be smaller, but as the Kaiser Family Foundation's research shows, the pre-Obamacare average for Medicaid/CHIP enrollment was 56.8 million. So, if we go back to that pre-Obamacare number, we end up with about 31 percent of Americans on government healthcare — still a hefty number.

Moreover, given the way the Obamacare "repeal" is written, we shouldn't expect any sizable long-term decline in Medicaid enrollment. That upward trend is going to continue unless major reforms take place. 

As an additional illustration of the outsized role of government agencies in the industry, we might also look to the fact that government programs are starting to eclipse private sector insurance within the health insurance industry: 

Here's a nugget that encapsulates the health insurance industry, despite all the noise surrounding the future of the Affordable Care Act: In the first quarter of this year, Aetna collected more premium revenue from government programs (namely Medicare and Medicaid) than it did from commercial insurance for the first time ever.


Why this matters: Most people get their health coverage from their employer, and that historically has been the bread and butter of the insurance industry. But the aging population and expansion of Medicaid managed care means insurers are investing more time and money in the lower-margin (but still lucrative) government programs. Aetna, in particular, has invested heavily in Medicare Advantage.

This "free-market" health care system of ours doesn't seem to have much in the way of freedom or markets. 

And finally, let's take a look at growth in federal government spending on health care over time. This is only federal spending and doesn't include state spending, such as the state-funded portion of Medicaid.

Between 1980 and 2014 — that is, before Obamacare — health care spending by the federal government increased many times over. Yes, there has been a surge in spending thanks to Obamacare, but it's a surge above what was already an immense amount of spending growth that already took place during the George W. Bush years and before. It was Bush, after all, who gave us an immense expansion of Medicare coverage into prescription drugs ten years before Obamacare.


If we look at federal health care spending in terms of growth compared to GDP, we find that health care spending has been outpacing GDP for many years:


If the GOP plan passed by the House today ends up doing anything to restrain these costs, then we might say it's a small victory. But let's not pretend that government programs are not the single biggest driver of spending in the health care industry. Indeed, when it comes to spending on welfare programs, the US is a typical Western welfare state. Even with the "repeal" of Obamacare, the myth of the free-market American economic system will remain exactly that: a myth.

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Entourage's picture

And two thirds are paying for it.

Sudden Debt's picture

60% of all Americans don't pay any taxes

so think about it... if you're paying for it, there's a lot of hands receiving.


But hey! They're all patriots!

Rehab Willie's picture

doesn't the labour force participation rate have the same 3:1 ratio.

yet this group qualifies for the all expenses subsidized lifetime pass to sit on their ass.

Sudden Debt's picture

And what this article lacks is the projection of future demographics and we'll all cry a river


And the people want more government in their lives/free shit

Creepy_Azz_Crackaah's picture

Not to worry... they'll blame "evil corporations" for the massive gubmint disaster then beg for more gubmint - as it gets even worse.

TeethVillage88s's picture

I challenge the Mises guy to do a better jobs with the numbers.

You have to add like $300 Billion for States portion of Medicaid, and add to the total cost of HHS Federal Budget, and think about rising prices, Obama Care Costs, over the counter drugs, people that pay for medical service without insurance, and those who fund their own insurance. Plus add in the VA Admin Budget, $180 Billion.

Remember USA pays much higher for consumer goods, and prescription drugs.

$300 + $180 + $1417 = $1.817 Trillion Annual US Health Care off the top of my head

- USA is number one in per capital Health Care cost, just no one wants to admit it yet!

Total—Department of Veterans Affairs Outlays 2016 = $180 Billion
Total—Department of Veterans Affairs Outlays 1998 = $46 Billion

Total--Centers for Medicare and Medicaid Services Outlays 2016 = $1.417 Trillion
Total--Centers for Medicare and Medicaid Services Outlays 2015 = $1.297 Trillion
Total--Centers for Medicare and Medicaid Services Outlays 1998 = $379.95 Billion

MalteseFalcon's picture

"This "free-market" health care system of ours doesn't seem to have much in the way of freedom or markets."

The US economy is rife with government granted monopolies in addition to straight out government activity.

Any movement towards free market economy would be an improvement.

It's a no-brainer.

Canary Paint's picture

No, it is not a no-brainer. Your free market is every bit as theoretic as "true communism." Just another idea...

Can you think of something that will get us from point A, which is now, to point B, which is functioning members of society getting healthcare at an affordable cost?

IMO, functioning members of society includes AT LEAST everyone willing to work.

Even if your fantasy world idea of a free market could exist, what do you want to do with people that have middle to low class jobs that are waiting for the "creative destruction" your free market depends on for the next 10 or 20 years?

I am not necessarily in disagreement with you, but please don't think for second that farting something out about your favorite -ism constitutes a solution to why the most prosperous nation on earth can't seem to let dishwashers go see doctors. Unless of course you think minimally skilled manual labors deserve exactly whatever crumbs they get. In that case, I can't argue with you since my axioms are entirely different.

techpriest's picture

Getting from A to B is actually pretty easy.

Betting there with absolutely no one suffering any way is impossible.

For example, when communism was massively cut back in China in the early 90s, there were a lot of professional parasites over there who were suddenly destitute, and some even starved to death, because they were so dependent on the old system (and only good at gaming it) that the end of communism was the end of them, also.

That's going to be the same for the restoration of freedom here, both in the medical industry and in the war crime we call American agriculture. It's going to be hella painful for Monsanto when people must learn that they are fat and sick because they have been lied to about nutrition. It will be painful for farmers who are built around ag subsidies, and the checks stop coming. It's going to be painful for hospitals to go back to performing actual price discovery. It's also going to be very painful for people who do not have a "plan B" when Social Security and Meddicare/Medicaid become far less generous.

Canary Paint's picture

You have given me some things to think about, sir, thank you.

MalteseFalcon's picture

Am I saying a full on free market?


Intelligently selected free market reforms will improve this economy.

We are so statist in 2017, there is low hanging fruit everywhere.

DontGive's picture

100% of Gooberment employees are on gov healthcare.

Sudden Debt's picture

they get paid with tax dollars to in essence, they get it all for free

government employees aren't a contribution to society but a cost.

Praetorian Guard's picture

How about taking care of yourself through proper nutrition and just having a catastrophic policy? Jesus, every time the govt gets involved in something the costs sky rocket, and service declines at an inverse rate... you would think they would know by now... but money lines the pockets, and thus they don't give a shit...


Come join us for FREE at ALL are welcome, free blog, classifieds, charts, etc.!!!

Sudden Debt's picture

They know.

For every dollar they give to the public they need 3 dollars.


The entire structure also costs money to maintain. It's not just the medicine and doctors that cost money.

But they do whatever gets them the votes.

Praetorian Guard's picture

I fully expect the day will come like the opening scene from the movie Oasis, which was not that good of a sci-fi... "Free Euthanasia" signs lined the road, due to the world becoming a massive shit hole in the year 2030...


Come join us for FREE at ALL are welcome, free blog, classifieds, charts, much more!!

techpriest's picture

Also, no politician was voted in on a platform of updating best practices for running a bureaucracy. Usually administrations run on an organization logic of always needing more people to do more tasks, even if some tasks are of dubious value.

In a private industry this is checked by the fact that too much BS from admins leads to bankruptcy. However, as one bureaucrat told me, "There's no recession in government! We can tax more!" Which means that public administrations grow like a cancer until social collapse, and you can't get away from it unless you leave.

HalinCA's picture

"60% of all Americans don't pay any taxes"


60% don't pay sales taxes?  Sign me up!


earleflorida's picture

yeah, and the 'HOUSE`GOP, just voted to slash 60% (2/3 is close enough, hmmm--- but trump gives $55 bln moar to military 50% Rev. Bud[fudge]t!

so mom gets moved into the poor house with the undesirables orphans & handicapped!

you go... Amerika

Laddie's picture

If the USSA is 60% White I would be surprised.

Obamacare is yet ANOTHER wealth transfer from US, the White populace, to the people of color. At the same time .gov is, effectively, killing off the Golden Goose, i.e. White America. I tell you there is a METHOD to their MADNESS.

MIT economist (((Jonathan Gruber))), a key architect of the Affordable Care Act, ACA Architect: 'The Stupidity Of The American Voter' Led Us To Hide Obamacare's True Costs From The Public, admitted that it was passed by exploiting political ignorance. If voters had known that the law would work by forcing young and healthy people to provide massive new subsidies for the old and sick, he doubts that it could have gotten through Congress:

“[Economist] Mark [Pauly] made a couple of comments that I do want to take issue with, one about transparency in financing and the other is about moving from community rating to risk-rated subsidies. You can’t do it politically. You just literally cannot do it, okay, transparent financing…and also transparent spending.” Gruber said. “In terms of risk-rated subsidies, if you had a law which said that healthy people are going to pay in—you made explicit that healthy people pay in and sick people get money, it would not have passed, okay. Lack of transparency is a huge political advantage. And basically, call it the stupidity of the American voter or whatever, but basically that was really, really critical for the thing to pass…Look, I wish Mark was right that we could make it all transparent, but I’d rather have this law than not.”

Doom Porn Star's picture

" I wish Mark was right that we could make it all transparent, but I’d rather have this law than not. "




Why is this avowed professional deciever of the Uniterd States citizenry still at large?

HopefulCynical's picture

Why is this avowed professional deciever of the Uniterd States citizenry still at large?

Because the moneychangers want the world buried in the shit he shovels.

drendebe10's picture

Fukda leeches. Fukemall.

DEMIZEN's picture

holy fuck i believed it was 20+ on medicaid

Sudden Debt's picture

That was 2 years ago, just wait how this chart will look like in 4 years from now

DEMIZEN's picture

that large enough critical mass to bring down any insurance scheme.

Peterman333's picture

gubbmint make me healthy

Entourage's picture

Get a job or die.

Entourage's picture

This impairment would not exist without the government.

coast1's picture

1/3 of americans on government healthcare.   90% of illegal immigrants on government healthcare.

Sudden Debt's picture

And 1/3 work for the government (civil & army)

1/26 is in jail






add them all up and productive America is actually a pretty small part of the population. And these aren't the people you commonly hear complaining. They don't have the time to protest and cry on television.

roadhazard's picture

Everyone on medicare paid for it.

Sudden Debt's picture

Don't blame medicare for the rising costs.


Blame those fucking "fellow Americans" who profit from the system because they're to fucking lazy and fat to work.


But hey, everybody deserves it right? Why not, money doesn't buy happyness....

drendebe10's picture

And fukda health insurance companies as well as the gawdam bure2 inefficient MRSA culture hospitals. Fukemall.

swmnguy's picture

Yes, they did.  The tricky part is those who need healthcare can't pay for it, and those who can pay for it don't need it.  That mismatch makes for very rich pickings for the Finance industry.  And why would the medical industry not get in on the looting, since they can?  And then, why wouldn't the Universities charge $300,000 for a medical degree, while we're at it?

roadhazard's picture

Who does not need health care. Cost is not the fault of Medicare, cost is the fault of greed. You need to stop voting for repubicans and democraps, National OR local.

homebody's picture

Free shit slaves and they think they are free.  Welcome to socialism where everyone shares at the lowest common denominator.

Sudden Debt's picture

Remember: In a socialist state, everybody who has a job is rich. No matter how much you make.


And the rich are the enemy, even if you think they don't mean you when they rage against "the rich"

homebody's picture

Hard to discern the "rich" in the line a block long to buy toilet paper.

peippe's picture

Blame the doctors & their lawyers.

Sudden Debt's picture

they are a very small part of the problem.

And those lawyers where introduced by the patients who sue everything dreaming to strike it rich.

drendebe10's picture

Fukda leech cockroach fukn lawyers. Fukemall.

brushhog's picture

The new bill takes out the individual mandate, which is good enough for me. I want to choose NOT to buy health insurance. Alot of people tell me I may live to regret that decision, but I also regret being forced to pay 700 dollars a month for a policy. So this really is an existential dilemna worthy of Kierkegaard;


“Marry, and you will regret it; don’t marry, you will also regret it; marry or don’t marry, you will regret it either way. Laugh at the world’s foolishness, you will regret it; weep over it, you will regret that too; laugh at the world’s foolishness or weep over it, you will regret both. Believe a woman, you will regret it; believe her not, you will also regret it… Hang yourself, you will regret it; do not hang yourself, and you will regret that too; hang yourself or don’t hang yourself, you’ll regret it either way; whether you hang yourself or do not hang yourself, you will regret both. This, gentlemen, is the essence of all philosophy.”
jamesmmu's picture
The GOP’s Take on the Budget Tells Us More than They Might Want

mendigo's picture

Cold and isolation to north.

Drug cartels and poverty to south.

Enslaved in between.

Had serious talk within my son that he should keep an open mind about where to live after college.

besnook's picture

one tiny millenial trend is the willingness to travel outside the usa. their parents are the most travelled americans in history and the larger immigrant population is always flying somewhere. growing up overseas and travelling extensively since, i can tell you there are great opportunities all over asia. there are jobs now for american english teachers that pay enough to make a living as an entry level introduction to a country. that allows someone to assimilate, learn how to do things, and network. i know a bunch of long time expats in asia who never come back to the usa anymore except for business and several has given up usa citizenship for tax reasons. we're going to southeast asia this coming winter to scout out retirement options. my first choice is japan but it is much more expensive than ho chi minh city. (retiring in ho chi minh city would complete the irony of my life in a hilarious way). americans don't understand how much freedom they have to give up for personal security besides .gov interference. asians in the right places are civilized.

drendebe10's picture

Fukda bloated bureaucratic inefficient bullsht gubmnt & all the useless turd bureaucrats that do nothing but suk the blood of working tax payung U.S. citizens as well as the elected corrupt political turds. Fukemall

Salsa Verde's picture

The easiest way to rule the people is to OWN the people.

twerkerworker's picture

Hello? Aetna makes more moolah *filling the holes* in the so-called Medicare program than providing health care coverage. The huge expense is for parasitic insurance companies writing their own benefits, not people getting health care. If we didn't design coverage holes for parasites to fill, Medicare would cost less and work better. Single payer, suckahs! Or corporate welfare. Hmm, which costs less?