For many Americans, one of the biggest frustrations with taxes is this: “If I’m paying thousands in federal, state, and local taxes each year, why isn’t my healthcare fully covered?” It’s a fair question, especially for employees whose employers don’t provide health insurance benefits.
The truth is, taxes serve a broader purpose than just funding healthcare and understanding where your tax dollars go can help you make more informed financial and healthcare decisions.
What Taxes Actually Fund
Taxes in the US aren’t earmarked for one specific benefit like healthcare. Instead, they support a wide range of public services, including:
- National defense and security – A significant portion of the federal budget goes toward defense spending.
- Social Security and Medicare – These payroll taxes provide benefits primarily for retirees and disabled individuals, not comprehensive healthcare for everyone.
- Infrastructure – Roads, bridges, utilities, and transportation systems.
- Education – Public schools, grants, and university programs.
- Public health and safety – Local police, fire departments, and emergency services.
- Government operations – Everything from running the court system to managing federal programs.
In short, your taxes fund a collective pool of public goods and healthcare is one piece of a much larger picture. With that in mind, here’s a rundown dispelling some common myths.
Myth #1: If I Don’t Get Health Insurance From My Employer, I’m Out of Luck
The Reality: Employer-sponsored health insurance is the most common way Americans get coverage, but it’s not the only option. If your job doesn’t offer healthcare, you may be eligible for:
- Subsidized coverage through the Washington Healthplanfinder marketplace
- Premium tax credits that lower your monthly payments
- Medicaid, if your income qualifies
- Health Savings Accounts (HSAs) or Flexible Spending Accounts (FSAs) to reduce medical costs with tax advantages
Your taxes may not “buy” you healthcare directly, but they do help fund these programs.
Myth #2: Other Countries Do It Better Because Their Taxes Go Straight to Healthcare
The Reality: Countries with universal healthcare systems do generally fund them through taxes, but that often comes with higher income tax rates, national sales taxes, or other trade-offs.
The US has a hybrid system:
- Employer-sponsored insurance for many working Americans
- Government programs (Medicare, Medicaid, VA) for specific groups
- Private insurance or subsidized coverage through the marketplace
It’s not better or worse across the board, but it is structured differently.
Myth #3: My CPA Can’t Help With Healthcare Costs
The Reality: A good CPA doesn’t just file your taxes, they help you minimize the impact of big expenses like healthcare. In fact, many people don’t realize they could benefit from:
- The Premium Tax Credit when buying coverage on the marketplace
- The Medical Expense Deduction if their out-of-pocket costs are high enough
- Using pre-tax dollars through HSAs or FSAs
If you feel like healthcare costs are eating up your budget, working with a CPA can help uncover opportunities to save.
The Bottom Line
It can feel frustrating to pay taxes without getting “free” healthcare in return, but the US tax system is designed to fund a wide range of services, not just medical coverage. The good news is, there are still tax strategies and credits available to reduce your healthcare burden—you just need to know where to look.