Health Care and Tax Day

April 15th! Wow, this day brings a chill to most Americans. It's the day everyone must file an income tax return (unless they request an extension). Even so, this day is when Uncle Sam expects you to ante up if you have not paid your "fair share" of taxes on your income. If you are lucky, you may get some money back because you overpaid during the year or come out even and not have to pay anything. All this money paid into the IRS during the prior year gets re-circulated throughout the year as the federal government pays for running the country. And today is the day when the tally is run to find out who gets paid--you or the Feds.

Now, you may ask, "What does April 15th and my income tax have to do with health care?" It has alot to do with it. The federal government uses your tax money to help offset the costs of paying for Americans who are uninsured and need medical treatment. As a taxpayer, a certain portion of your income, which is collected by the government in the form of taxes, is paid to hospitals and other medical providers to help pay for people without coverage. A 2003 study in Health Affairs estimated that uninsured people in the U.S. received approximately $35 billion in uncompensated care in 2001. The study noted that this amount per capita was half what the average insured person received.

Additionally, the study found that various levels of government finance most uncompensated care, spending about $30.6 billion on payments and programs to serve the uninsured and covering as much as 80–85 percent of uncompensated care costs through grants and other direct payments, tax appropriations, and Medicare and Medicaid payment add-ons. Most of this money comes from the federal government, followed by state and local tax appropriations for hospitals. Another study by the same authors in the same year estimated the additional annual cost of covering the uninsured (in 2001 dollars) at $34 billion (for public coverage). Your tax dollars at work.

Health care costs for the uninsured must often be absorbed by providers as free care, passed on to the insured via cost shifting and higher health insurance premiums, or paid by taxpayers through higher taxes. As the economy continues this year to slow down in many parts of the U.S., more and more individuals and families are being added to the ranks of the uninsured. As a result, more pressure is being put on the health care system to find ways to cover the expense of so many Americans who cannot afford insurance and still need treatment. Just because you don't have a job doesn't mean your kids or your spouse are going to stop getting sick. And what about catastrophic care? Hospital ERs are bursting at the seams, and much of the emergency care that hospitals deliver is not reimbursed to them by the patient. Federal law mandates that treatment must be given, and that no one can be turned away if they show up for care at a hospital emergency room regardless if they are insured or not.

Business Week reported in April, 2007, that of the $2.7 trillion federal tax coffers, about 15% goes to Medicare for the elderly and disabled. There are two main categories in the federal budget: federal funds and federal trust funds. Federal funds are considered "discretionary" dollars—meaning Congress and the President have a say in how they're spent. Federal trust funds are "nondiscretionary," meaning the money has been spoken for. Each category takes up about half the total budget. Federal trust funds include spending mainly on Social Security payments, the Medicare program, and part of the Medicaid program, or $1.5 trillion.

The report also stated spending on health-care programs, including Medicare, Medicaid and the National Institutes of Health, makes up $546 of the total median tax bill, or 19 cents on the dollar. It may surprise some taxpayers that health spending takes up such a large part of the discretionary tax bill, even though almost 50 million Americans are uninsured. Critics are quick to point out that soaring health-care costs—coupled with government picking up the tab for emergency services for the uninsured—makes for an inefficient system. Medicare, the health program for the elderly and disabled, cost taxpayers $338 billion in 2006.

This month, AOL money released a report on what happens to American tax dollars related to health care expenditures. As American taxpayers kiss another April 15 tax deadline goodbye, the median income family in the United States paid $2,628 in federal income taxes in 2007. Here's how that money was spent--Health: average total: $581. That means 22.1 cents out of every federal income tax dollar went toward health programs. The health category ($458 billion) is the federal funds portion of all spending by the federal government, including the federal funds spending on Medicare. With the increase of $120 billion in spending seen in just one year, you can just imagine what the costs will be as tens of millions of Baby Boomers cross over to retirement and age 65 over the next ten years. The financial burden to American taxpayers will increase astronomically under the current status quo. However, most people agree that something should be done to help reduce costs of covering the uninsured and elderly, but they don’t want to pay higher taxes to do it.

As Americans stare down the barrel at a new presidential administration that will be determined in just a few short months, the fear of economic loss is looming larger as each day passes. The increase in government monies being spent on health care is getting greater each year. The United States is on a fast track to bankruptcy unless acceptable solutions are enacted by a responsible President and Congress who are willing to make hard choices. Although access to good health care is a privilege and not a right, each of us has a moral and fiscal responsibility to our families and to our nation to make our tax dollars count and not be wasted.

Until next time. Let me know what you think.