Spending on health care in the United States amounted to 17.9 percent of gross domestic product in 2017. Households paid for this care through out-of-pocket medical spending and a complex mix of out-of-pocket premiums, employer premium contributions, taxes, and subsidies that combined to finance private employer-sponsored insurance, nongroup insurance, and multiple public insurance programs. Our analysis examined the impact of this complex system of health care financing on households in the period 2005-16, tracking how economic and policy changes affected incidence-that is, the amount paid to finance health care, either directly or indirectly, by households as a share of their pretax income. Health care financing was regressive at the start of our study period, with households in the bottom 20 percent of income paying 26.8 percent of their income compared to about half that amount for those with income in the top 1 percent. By 2016 incidence had become approximately proportional (the same percentage across all income levels). In part, these results reflect increases in coverage through Medicaid and the Affordable Care Act Marketplaces, which are progressively financed through the federal tax system.
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