Healthcare expenditures represent a significant portion of a nation’s economy. According to data from the Centers for Medicare and Medicaid Services, the United States spent approximately $3.8 trillion on healthcare in 2019, translating to about $11,582 per person. This figure is notably higher than what is spent by most developed countries worldwide. Yet, in many critical measures of public health, the US lags behind these countries. This article provides an in-depth examination of the US health system, shedding light on the costs and where they are directed.
Understanding the Costs
The bulk of healthcare costs in the US go toward hospital care (33%), physician and clinical services (20%), and prescription drugs (10%), according to data from the National Health Expenditure Accounts (NHEA). The remaining funds are distributed among a variety of services, including nursing care facilities, home healthcare, and other personal care services.
Much is made of doctors in the U.S. healthcare system. Namely, that there is a shortage and that it’s very difficult for healthcare centres and hospitals to find the right candidates for their postings. While services like a physician recruiter make the job easier, when the high-cost of U.S. healthcare is often pinned, wrongly, doctors’ wages, it becomes less appealing to work in the industry. In fact, the salaries of doctors only account for 8% of the overall healthcare costs.
While these statistics might suggest that a substantial portion of healthcare costs is dedicated to direct patient care, administrative costs also represent a significant slice. A 2020 study published in the Annals of Internal Medicine estimates that administrative costs account for about 34% of US healthcare expenditures, amounting to $2,497 per capita. That’s four times more than Canada, which has a more streamlined single-payer system.
Comparisons with Other Countries
Despite the high expenditure, the US does not necessarily fare better in healthcare outcomes compared to countries with lower healthcare costs. The US has a lower life expectancy and a higher infant mortality rate than countries like Canada, Germany, and Australia, which spend significantly less on healthcare per capita.
According to the Commonwealth Fund, in 2020, the US ranked last among 11 high-income countries in measures of healthcare quality, efficiency, access to care, equity, and healthcare outcomes, despite spending a higher percentage of its GDP on health.
Lack of Universal Coverage
One significant distinguishing feature of the US healthcare system is the lack of universal healthcare. Universal health coverage is a broad concept that implies that everyone, irrespective of their financial standing, receives the medical care they need without incurring financial hardship. Unfortunately, in the United States, access to health care is largely tied to insurance, which is often obtained through employment.
As of 2020, approximately 8.5% of the US population, or 27.5 million people, did not have health insurance at any point during the year, according to the US Census Bureau. That represents a significant portion of the population who couldn’t access healthcare services or face potential financial ruin if they do.
This lack of coverage has significant implications for health outcomes and contributes to the overall inefficiency of the healthcare system. Without preventative care, minor health issues can evolve into major, costly health crises that are more expensive to treat. In addition, individuals without health insurance are less likely to receive preventative services and screenings, which can lead to delayed diagnoses and more complex and costly treatments down the line.
In understanding what we are paying for within the US health system, it is essential to recognize that high expenditure does not necessarily equate to better health outcomes. The system’s complexity, combined with high administrative costs and a lack of universal coverage, contribute to the discrepancy between price and value in American healthcare.
As discussions about healthcare reform continue, it will be essential to focus not only on reducing costs but also on improving efficiency and outcomes. Only then can we ensure that our healthcare dollars are being put to the best possible use.
