Health care spending consumes a large portion of personal, business and governmental finances. Prior to the economic recession that began in 2008, annual health care costs had for some years exceeded the overall rate of inflation by an average of 2.5 percent per year. Consequently, health care accounted for a steadily increasing portion of the nation's gross domestic product.
Dr. Clif CleavelandSince 2008, health care expenditures have slowed. For 2013, the most recent year for which we have complete data, spending on health care in the U.S. grew slightly to $2.9 trillion or 17.4 percent of GDP. That translates to $9,255 per person for the year. For four years, the portion of GDP devoted to health care has remained stable despite the addition of millions of previously uninsured persons to various health plans.
By contrast, Canada, France, Germany and Switzerland, the next biggest spenders, devoted less than 12 percent of their GDP to health care during 2013. Each country provides universal access to health services.
Private health insurance covers 190 million Americans and accounts for 33 percent of health care spending. Slower spending in this category may reflect high-deductible plans in which policy holders must pay more out-of-pocket for services.
Medicare accounts for 20 percent of health care spending, providing coverage for 51 million enrollees. Enrollment slowed and payments to providers were decreased by the budgetary sequester of 2013.
Medicaid provided coverage for 55 million, almost half of whom were children. The program accounted for 15 percent of health care spending. Both enrollment and spending increased as consequences of provisions of the Affordable Care Act.
Out-of-pocket expenditures accounted for 12 percent of health care spending. These reflect co-payments, deductibles which in some policies can be high, and items excluded from coverage.
Another way to consider health care spending is to look at the sources of expenditures. Households lead the way with 28 percent. The federal government is next at 26 percent, followed by business at 21 percent and state and local governments at 17 percent. Seven percent derives from other private resources such as foundations.
The American health care enterprise is incredibly complex, involving countless care providers, researchers and administrators who work in a wide variety of private, public and governmental settings. Even with improving efficiency costs will remain substantial.
Several important questions merit attention:
To what extent will health care costs accelerate as the economy fully recovers? Past recessions have been followed by spikes in health care spending that typically exceed the overall rate of inflation.
How will a steadily increasing life-expectancy impact Medicare as more people enter retirement? Will the age of retirement drift upward? Does a longer life expectancy translate into more years of personal productivity or of care in nursing homes and assisted living facilities?
How will new, ultra-expensive medications affect insurance premiums? Individual drugs for malignant diseases and complex, chronic diseases may exceed $100,000 per prescription per year. Many once fatal illnesses have been transformed by modern therapies into chronic conditions with expensive programs of maintenance drugs.
If opponents to the Affordable Care Act succeed in dismantling the program, what will replace it? How will this affect health care spending? To date, opponents of the ACA have not submitted a coherent, comprehensive plan to provide affordable, efficient universal access to health care.
Useful sites for further information are Centers for Medicare and Medicaid Services (cms.gov) Kaiser Family Foundation (kkf.org) and the Commonwealth Fund (commonwealthfund.org).
Contact Clif Cleaveland at cleaveland1000@comcast.net.