U.S. healthcare costs: It's time to get worried
U.S. healthcare spending far exceeds that of any other developed nation. The U.S. now spends 17.6% of its gross domestic product on healthcare, whereas France spends only 11.6% and Australia only 9.1%. Total U.S. health expenditures neared $2.6 trillion in 2010, more than ten times the $256 billion spent in 1980.
U.S. healthcare costs: It’s time to get worried
The rise in healthcare costs over the past several decades has been astounding. And as they continue to increase, the national deficit grows along with them. The high cost of healthcare impacts the national budget and economy in a variety of ways.
U.S. healthcare spending far exceeds that of any other developed nation. The U.S. now spends 17.6% of its gross domestic product on healthcare, whereas France spends only 11.6% and Australia only 9.1%. Total U.S. health expenditures neared $2.6 trillion in 2010, more than ten times the $256 billion spent in 1980.
Healthcare costs are rising more rapidly than wages. As of 2007, over 60% of individuals who filed for bankruptcy did so due to medical bills, a 50% increase over the percentage who filed for medical reasons in 2001. As many as 75% of those people had health insurance but could not afford medical bills due to gaps in coverage.
So why does U.S. healthcare cost so much?
One reason is that healthcare is not a competitive market. For example, large hospitals often dominate local markets and use this status to extract high prices from insurance companies. Competition is also limited in many insurance markets, which makes it easier for companies to raise rates.
Americans are also remarkably unhealthy, and the population is aging rapidly. Almost half of all Americans have at least one chronic condition such as asthma, heart disease, or diabetes, which are expensive to treat over a lifetime. The obesity epidemic is not helping either. Two-thirds of U.S. adults are either overweight or obese, which results in more chronic illness. As these trends produce more illness, projections show that Medicare enrollment will increase by an average of 1.6 million people annually as baby boomers begin to retire.
The cost of prescription drugs and new medical technologies also contributes significantly to healthcare spending. While the development of new drugs and treatments are costly, many of them are not cost-effective. Patients and providers frequently demand the newest technology, even when it has not been proven more effective than the existing treatments.
Why should we be concerned?
If individuals are dedicating a significant portion of their expenses to paying off medical debt, they will have limited expendable income, which could otherwise be spent in the marketplace and boost the overall economy. Furthermore, individuals are depleting their retirement savings to pay down medical debt, which may lead to an increased reliance on public funds.
Rising healthcare costs may also lead the federal and state governments to raise taxes, which could suppress economic growth or cause funds to be reallocated from other critical sectors such as education and infrastructure.
They could also impair the business sector. Rising healthcare costs could lead companies to reduce employment and investments. They could fuel inflation and make U.S. goods and services less competitive in international markets.
As the U.S. economy continues to struggle, efforts to rein in healthcare spending should remain a priority for politicians at both the local and national levels. The future of the U.S. economy could depend on it.
- Erica B. Cohen
I am confident that once Obamacare kicks in with its unionized bureaucrats running the system as efficiently as the Post Office or the IRS, the cost will come way down. You have Obama's word on it. Hope you are rich, or politically connected.— Beethoven987- time for single payer healthcare. wake up America, and join the rest of the civilized world.
beethoven: ony delusional right wing nutjobs could read and article laying out all the problems with cost associated with our privatized system and then twist that into an assault against the opposite . the problem is that our system is FOR PROFIT.— Ryan - King Obama said his healthcare plan will lower costs....of course that was said so the idiot swould vote him back in, then reality comes and hey, gues what, I now pay about 15% more for my coverage so I can cover everyone who doesn't pay for their own healthcare, man, King Obama is awesome. Elected on a bunch of lies— dcn
- If Obama care is so good, why did the President, Congress and the senate vote to exclude themselves from it???????— dcn
- The costs are so high because insurance companies are inefficient parasites.— foghelmut
- "Two-thirds of U.S. adults are either overweight or obese, which results in more chronic illness." Obese people should have to pay higher premiums— main liner
- Erica, where were you during the last election????? Did you go to sleep?? That Clown in the WH kept telling everyone that the national debt wasn't the problem and we should keep on spending!!! what a clown and now you are worried about the DEBT???? GIve me a break. Get a real job, Writing isn't for you. Go wait on tables....— rduexpress
- How do you write this article after you endorsed the president and the program? Seriously how come you did not think about this earlier. Let me give you a hint if the president and congress dont cut spending inthe next six months your future article will be on the debt and entitlements "time to get worried" when will the people in this country stop being democrats and republicans and start being americans - this goes for the media as well. If younthink you are in an influential position wherever you are we need to stop acting in our self interest and start acting in the interest of our country and children is it not obvious we need to cut spending and raise revenue.— JL68
- "the problem is that our system is FOR PROFIT."
Yet, there are many other companies and industries that are for profit, yet they continue to deliver cheaper and better goods due to competition.
Maybe its the regulations and coverage mandates, imposed by government that raises the costs. Or the antiquated employer sponsored model, in which the consumer is not the customer.— RG - people blaming obama are unbelievably foolish. Obamacare, not yet fully implemented, will absolutely contain costs. albeit not enough. but the costs are rising in spite of the affordable care act, not because of it. the problem goes back 40 years. the HMO, PPO, employer paid systems are unsustainable. it is a major drag on american businesses and the government and provides bad services for the customers. the only ones who benefit are the insurance companies and big pharma and the like. we spend over 19% of GDP on healthcare for worse results. while countries with single payer are paying less than half that amount with better results by implementing a medicare for all strategy.— Ryan
- "Please Mr. Obama, may I have some more?" --apologies to Chas Dickens— OrvalEugeneFaubus
- I blame unhealthy people and they should pay more, not people who make more money. Believe me, I'm not the healthiest person and I'd pay more because I could use the motivation and I'll take responsibilty for my lifestyle.— Phillies2008WSChamps
- Gee, I wonder why my health care and prescriptive cost have increased substantially? Couldn't be Obamacare by any chance???— dogman5
- There is a major problem with our school system and a good number of parents. Young adults get very little opportunity to learn to think for themselves vs memorize and regurgitate information. There is very little learned about cause and effect as well as very little opportunity to get any real experience outside academia until they are in their 20s and then with a tough economy that can be delayed too. If feel bad for the generation in there 20s as they were told to go out and do x y and z and such and such would happen. The advice was bad and I am not sure how resiliant they are to regroup and think for themselves how to solve their problems vs looking to others for help because they feel the problems are overwhelming. I blame the baby boomers their parents as one of the worst generations ever but the reality is that does not matter. One really needs to step back and figure out how best to manuever in this new environment that unfortunately will continue to be more challenging - if our society is experiencing a lower standard of living you cant change save everyone through taxing and spending money that is not their. But you can better yourself by figuring out what to do iin the current environment and no one is going to tell you because that is not how it works. You cant wait for the government to save the day and make a non profit healthcare system or your company to give you a big raise or to hire you if your unemployed but you can create your own opportunites - unfortunately I fear many are waiting for godo.— JL68
- We could keep health insurance costs down by making the insurers non-profits because they keep working against the people trying to figure out how to sell us more insurance that covers less. Every year the insurance cost goes up. These for-profit insurers never keep it the same. Also, while the drug companies say R & D is costly, I would propose that that is a bold-faced lie. After all, what was the last big drug after Viagra that really came out of these R&D moneypits? These drug companies are the snake oil salesmen of our times. And the doctors should remember their fricking Hippocratic and police themselves. Stop with the greed people, we are God's people - This Christmas it is said that Jesus appeared for the first time as an infant in his Mother's arms at Medjugorge (the only place where supernatural events are said to be actually continually occurring for all you goofy Twilight Vampires). You know what He said "Live My Commandments." Q. Do you remember what His New Testament Commandment was? A. "Love One Another." That's the answer to your troubles. So, get to it.— RR
Health care is changing almost before our eyes, and the headlines just scratch the surface. From Obamacare to Medicare to managed care to genomics, the blog reports on and analyzes the laws, government policies, and political trends that are transforming the care we receive and the way we pay for it. The Field Clinic dissects the latest health care news, explaining it and putting it in context.
The Field Clinic is written by:
Robert I. Field, Ph.D., J.D., M.P.H, professor of law at the Earle Mack School of Law and professor of health management and policy at the School of Public Health at Drexel University. He is the author of Health Care Regulation in America: Complexity, Confrontation and Compromise, a comprehensive overview of the government’s oversight of health care published by Oxford University Press.
Erica Cohen, a third-year law student concentrating in health law at Drexel University Earle Mack School of Law. She graduated from the Scripps School of Journalism at Ohio University with a major in online journalism and minors in business and political science. Prior to attending law school, Erica worked for DKMS Americas, the world's largest bone marrow donor center. She currently works as a legal intern in the office of general counsel at a local hospital.
