Nominal health spending in the United States grew 4.4% in 2008, to $2.3 trillion or $7,681 per person. This was the slowest rate of growth since the Centers for Medicare & Medicaid Services started officially tracking expenditures in 1960, yet once again outpaced nominal GDP growth (2.6% in 2008). This brings health care spending to 16.2% of GDP. In 2003 the total health care spending was 15.3% of GDP.

The huge amount being spent continues to grow to an even larger percentage of GDP every year. The damage to the economy of the dysfunctional health care system in the USA is huge. For comparison the total GDP per person in China is $5,970 (the closest total country per capita GDP, to the health care spending per capita in the USA, is Thailand at $7,703 – World Bank data). The average spending by OECD countries (Europe/USA/Japan…) was $2,966 per person in 2007 (the USA was at $7,290). In 2007 Canada spent $3,895; France $3,601; UK $2,992; Japan $2,581.

Hospital spending in 2008 grew 4.5% to $718 billion, compared to 5.9% in 2007, the slowest rate of increase since 1998.

Physician and clinical services’ spending increased 5.0% in 2008 to $496 billion, a deceleration from 5.8% in 2007.

Retail prescription drug spending growth also decelerated to 3.2% in 2008 as per capita use of prescription medications declined slightly, mainly due to impacts of the recession, a low number of new product introductions, and safety and efficacy concerns. Drug prices increased 2.5% in 2008.

Spending growth for both nursing home and home health services decelerated in 2008. For nursing homes, spending grew 4.6% in 2008 compared to 5.8% in 2007.

Total health care spending by public programs, such as Medicare and Medicaid, grew 6.5% in 2008, the same rate as in 2007.

Health care spending by private sources of funds grew only 2.6% in 2008 compared to 5.6 percent in 2007.

Private health insurance premiums grew 3.1% in 2008, a deceleration from 4.4% in 2007. Remember many people lost their jobs and did without insurance. Doing so results in reduced spending on health insurance but is far from a good sign.

Home health care spending growth decelerated from 11.8% in 2007 to 9.0% in 2008. Expenditures reached $64.7 billion in 2008. You can understand why investors (and companies) are looking to invest in home health care.

At the aggregate level, the shares of financing for health services and supplies by businesses (23%), households (31%), other private sponsors (3%), and governments (42%) have remained relatively steady over time. Between 2007 and 2008; however, the federal government share increased significantly (from 23 to 25%), while the state and local government share declined (from 18 to 17%).

Decades ago Dr. Deming included excessive health care costs as one of the seven deadly diseases of western management. We have only seen the problem get worse. Finally it seems that a significant number of people are in agreement that the system is broken.



I truly do not understand how the USA continues to subsidies those special interest in favor of the current obviously broken system. How people can possible claim the USA is so bad at health care we can’t possible just pay say 20% more per person to get results no better than other countries. We are not comparing the USA to some idealized dream system. We are comparing it to government run programs that are amazingly cheaper and have at least equal (often better) performance measures.

Do these special interests really expect us to accept that the USA system requires us to pay 243% of the OECD average for worse outcome measures? And even then, tens of millions of people’s lives caused great distress due to the lack of health care or financial ruin due to health care costs they must pay out of pocket? The apologist for the special interests have had decades to fix this system. We can’t afford to keep letting them distort our economy for their benefit. They have had decades to make gains. We need to stop letting the special interests delay and start adopting sensible solutions now.

Read the complete National Health Expenditure Data report.

Related: USA Spent $2.2 Trillion on Health Care in 2007 – International Health Care System Performance – Resources to Help Improve the Health Care System – Applying Disruptive Thinking to the Health Care Crisis

Comments