NU Online News Service, Feb. 26, 2004, 2:23 p.m. EST – Supporting the private health insurance market will cost the federal government about $188 billion this year.[@@]

John Sheils and Randall Haught, researchers at The Lewin Group L.L.C., Falls Church, Va., have published that estimate in a paper on the Web site of Health Affairs, a health finance policy journal.

In the Health Affairs paper, Sheils and Haught look at the federal government’s “tax expenditure” on private health coverage. The researchers define “tax expenditure” as “the amount of revenues that the federal government forgoes by exempting health benefits and spending from the federal income and Social Security taxes.”

The researchers include employers’ deductions of health benefit contributions for workers and retirees, health benefit deductions for the self-employed, deductions of contributions to flexible spending accounts, and tax deductions for health expenses.

The researchers note that families with annual incomes of $100,000 or more, who make up only 14% of the U.S. population, account for 26.7% of all health benefit tax expenditures.