Health Care Spending in the US

By the time we reach New Year’s Eve it is projected that total health care spending in the U.S. for 2016 will reach $3.4 trillion. What does that figure represent? 

 It is the total amount of money spent on care by government, private health insurance, and out of pocket costs to patients on all forms of care, treatment, and medications. As a nation we are approaching $10,000 per person, the highest per capita health care spending of all the large industrialized countries in the world.

 If you wonder why, despite our recovery from the deepest recession since 1929, you don’t find yourself with $25 or $50 extra bucks mad money at the end of the week it’s partially because all that extra “walking around” money is going to health care. By 2025 it is projected by the government that about $1 in every $5 spent in this country will go to health care. 

It’s hard to wrap your brain around a what a trillion dollars really means. Politicians, health care executives, pharmaceutical manufacturers have no problem throwing out these numbers…mainly because they’re talking about OPM (other people’s money). It’s amazing how casually it’s mentioned that annual spending on something like prescription drugs is approaching $475 billion. That’s about $1,500 for every man, woman, and child per year. Let’s look at some of the numbers with all the zeroes after them and try to put things into perspective:

 Fun With Numbers  

What else can we buy with “just” a trillion dollars?  

• If college, on average, cost $30,000 per year for four years $1 trillion could pay the whole tab for more than 8 million students (and we will spend 3.4 times that amount on health care this year, or roughly tuition, fees, and books for 28 million students’ 4-year college costs).
• New wheels…for an average car in the $20,000 to $25,000 price range $1 trillion could aquire about 42 million shiny new cars or roughly all the new cars sold in the US for five years.
• How about a vacation home? $1 trillion buys you about 5 million of them.
• What about all of the salaries for US senators and congressional representatives? Yes, $1 trillion’s got them covered for more than the next 10,000 years. So if we used the $3.4 trillion that we spend on health care that would pay congressional salaries for the next 34,000 years. Term limits anyone?
• Sweet tooth? $1 trillion could buy every single person in the country 1,000 boxes of Girl Scout cookies (make mine Thin Mints).

So, as you see, we spend enormous amounts of money on health care. What do we get in return? Let’s look at some key measures as compared to the rest of the world:  

• Infant mortality – the US ranks 56^th in the world¹
• Life expectancy at birth – the US ranks 42^nd in the world¹
• Deaths per 100,000 of population from coronary heart disease – the US ranks 65^th in the world²
• Deaths per 100,000 of population from all cancers – the US ranks 129^th in the world²
• Deaths per 100,000 of population from diabetes – the US ranks 50^th in the world²

1. source: World Fact Book – US CIA
2. Source: World Health Rankings – LeDuc Media

Are you angry yet? This message is not meant to be political. It’s too easy to try to indict one faction or politician for our massive overspending and underperformance relative to the rest of the world. It’s easy too, to point fingers at insurance companies, pharmaceutical manufacturers, the medical community, and the legal community (yes, there is a lot of “defensive medicine” practiced in the US to avoid or minimize malpractice lawsuits). But this is a complex problem with lots of moving parts. All I know is that our system is unsustainable in its current form and unless the public organizes for real change we will be forced to live with an ever higher percentage of our hard earned incomes going to a health care system that is shortchanging us on value. There are valuable lessons to be learned from many of the other countries in the world. Time to take a closer look.

Thanks for reading.