Key Elements of the U.S. Tax System

Federal spending on health care in 2015

The Congressional Budget Office and the Office of Management and Budget estimate that the federal government will spend more than $980 billion on health care in fiscal year 2015 (see table 1). Of that, Medicare will claim roughly $527 billion, Medicaid and the State Children’s Health Insurance Program (SCHIP) about $353 billion, veterans’ medical care about $61 billion, and subsidies for the Affordable Care Act’s health insurance exchanges about $41 billion. In addition to these direct outlays, various tax provisions for health care create tax expenditures that total nearly $260 billion. About 60 percent of that figure comes from the exclusion from taxable income of employers’ contributions for medical insurance premiums and medical care.