Ouch, Is That What It Costs?

How expensive is health care? Many people only pay attention to their co-pays, their share of the premium, maybe their deductible. But what are the real costs – to each individual, to the country as a whole? Health care spending reached nearly $2 trillion in 2005 (the last year numbers are available) up from 28 billion in 1960. This number means little by itself. To all but economist it could be billions, trillions, quadrillions, or even vigintillion (it’s a real number).

Don’t tune out just yet! Here are possibly some more useful numbers:

In 2005, 16% of the GDP (total economy) was spent on health care up from 5.2% in 1960. This is projected to rise to 19.6% in 2016. In simplified terms today 1 out of every 7 dollars spent today is spent on health care. One out of 7! In 2016 it could be as high as 1 out of 5 dollars.

In 2005, the national health spending was $6,697 per person. Averaging all of the health care out each person’s care averaged over $6,000! That figure is up from $3,783 in 1995.

In comparison, in 2005 here are the numbers for a few other countries. Let me remind you that almost all of these countries have better health outcomes than the U.S and all provide universal health coverage.

Switzerland (2nd most expensive): $4,077
Canada: $3,165
France: $3,159
Australia: $3,120
U.K.: $2,508
Spain: $2,094

These numbers were accumulated by CMS (Center for Medicaid and Medicare Services) and the OECD (Organization for Economic Co-operation and Development). Check out these numbers and many more at the California HealthCare Foundation.

I will try to get into the many reasons why health care is so expensive in the United States. But I hope that everyone can sit for a second and digest these numbers. They are huge in total number. They are huge in percent of economic activity. They are huge in comparisons with other health care systems, and they are huge in relation to the quality that we are getting.


2 responses to “Ouch, Is That What It Costs?

  1. When doing international health care system comparisons, let’s make sure that we don’t get tripped up by apples vs. oranges comparisons. For example, cross-cultural measures of “health outcomes” are notoriously unreliable. They’re influenced strongly by the levels of patient responsibility (imagine here Sweden vs. the USA), personal commitment to health maintenance (imagine here obesity rates in the USA vs. anywhere else), etc. ad nauseum.

    Similar dangers exist when cross-comparing health care costs, even when such comparisons are conducted by organizations without a political axe to grind.

    I don’t know enough to take exception with any of the numbers cited above. I’m just commenting on the need to treat any/all such numbers with suspicion.

  2. It is clear by all the numbers no matter which way you look at them, no matter who crunches the numbers, the U.S. spends more on health care than any other country. This point is not in question. We spend more and cover less. The reason for this is in question, but we do spend more per person, as percent of GDP , and the costs are continuing to rise in relation to inflation. The scary thing is that health care is going to continue to get more expensive leaving health insurance further out of the reach of more and more people. Something has to change.

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