Health Expenditures Consume Ever-Growing Share of Federal Budget

October 19, 2001

A recent report from the Congressional Research Service (CRS) explains that health care expenditures have grown considerably over the past 40 years: from $23.4 billion in 1960 to $1.06 trillion in 1999. These figures do not include expenditures for administrative costs, research, and public health activities.

The report, "Health Care Spending: Past Trends and Projections," notes that "health care spending as a percent of gross domestic product (GDP) continues to rise, indicating that health care is consuming an increasing portion of the nation's economic resources." In 1960 health care spending accounted for 4 percent of GDP. In 1999 it grew to 11 percent. "Much of this growth occurred between 1960 and 1991," reports the CRS.

How Much Should Americans and the Federal Government Spend on Health Care?

Should citizens be concerned about these trends? From a free-market perspective, citizens ought to be free to spend their own money on as much health care as they desire. The federal government should not restrict individuals' freedom to purchase privately the types and amount of health care services and insurance of their choice. However, when it comes to federal spending on health care, that is another issue.

Continued growth in federal spending on health care will most definitely crowd out funding for defense and national security priorities. The charts below (created by the Institute for Health Freedom) show trends in federal spending on Medicare, Medicaid, and Social Security compared to defense.

This information is presented to foster constructive debate about the appropriate level of government spending on health care versus other important needs, such as defense, in a free society.