The biggest U.S. health insurance subsidy for people under 65 is the federal income tax break for employer-sponsored health benefits, according to a new analysis from the Congressional Budget Office.
The group health tax exclusion will account for about $283 billion of the $737 billion in 2019 federal health insurance subsidies for people under the normal Medicare eligibility age, the CBO estimates.
The group health tax exclusion amounts to about 38% of 2019 federal health insurance subsidies for people in the pre-Medicare age group. The share of pre-Medicare-age federal health insurance subsidies going to the group tax exclusion could rise to 44% of the total by 2029, the CBO predicts.
The group health tax subsidy will cost the federal government about $4.2 trillion over the 10-year period from 2020 through 2029, according to the new CBO projections.
The CBO is estimating that all types of federal health insurance subsidies for the pre-Medicare age group will amount to $9.9 trillion over that same 10-year period.
The Medicare Office of the Actuary has predicted that the United States will spend about $47 trillion over the 10-year period from 2018 through 2017 on all sorts of health care, including long-term care.
Medicare could account for about $18 trillion in spending over that 10-year period.
Here are the estimated 2019 subsidy amounts for some other types of pre-Medicare age subsidies:
- Medicaid for Non-Disabled Adults: $112 billion
- Medicaid for the Blind and Disabled: $109 billion
- Medicaid for Children/Children’s Health Insurance Plan Coverage: $94 billion
- Affordable Care Act Exchange Plan and Basic Health Plan Subsidies: $62 billion
The CBO has also provided estimates of the average amount of federal subsidy money per various type of subsidy recipient.
Here’s a look at some of the per-recipient 2019 subsidy averages for four major types of health insurance:
- Employment-Based Coverage: $1,810
- Medicaid/CHIP: $4,620
- ACA Individual Health/Basic Health Plan: $6,490
- Medicare: $10,620
The CBO released a similar subsidy analysis about a year ago.
The CBO believes that Medicaid and CHIP are covering about 2 million more people than they were covering a year ago, and that individual health policies and the Basic Health Program might be covering about 2 million more people.
They believe total federal health subsidy spending has increased about 1.9%.
A copy of the CBO analysis of federal health insurance subsidies is available here.
— Read Kleinbard to Congress: The Cows Must Die, on ThinkAdvisor.