How high costs hurt us

How many dollars are spent on health care in the U.S.?

  • In 2016, the U.S. health care system cost $3.3 trillion, or $10,348 per person.
  • This equates to 17.9% of the gross domestic product —more than twice the percentage in 1975, and about double what all other developed countries currently spend.
The graphic below, although based on 2011 data, shows that U.S. spending is higher than total GDP for a number of wealthy countries.

How does health care spending compare to spending in other areas of the economy?

Health care accounts for about 26% of the federal budget; more than defense and social security. This figure does not include non-public sector spending on health care, both individual and employer, which totaled $1.8 trillion in 2016. As the image below depicts, the majority of the federal budget, i.e. taxpayer money spent by the federal government is for health (Medicare, Medicaid, CHIP) and Social Security: Many people think that the U.S. spends a large amount of its budget on “welfare” programs, when in fact, they are a minuscule part of total, as shown by their absence on the above pie chart:

  • Temporary Assistance to Needy Families (TANF), formerly known as welfare, is less than 1% of federal spending in 2015.
  • Supplemental Nutrition Assistance Program (SNAP), formerly known as food stamps, was about 2% of federal outlays in 2015.
  • Foreign humanitarian aid is 0.2% of the federal budget.

In the past 40 years, how much has health care spending grown?

In 1970, health care spending in the U.S., both private and public, was $75 billion, and in line with the rest of the developed world. In the 1980s, as the graph below shows, the U.S. deviated drastically. This, in part, was due to political responses to the 1970s recession, which paved the way for private health care companies—medical products, insurance, and pharmaceuticals—to take advantage of weak American regulations in the health care sector when the economy rebounded in the 1980s. Furthermore, during the 1980s, the prevailing idea of free-market forces as a panacea for the economy dominated legislation, and created an opportunity for the private sector to increase its profits. Consequently, the cost of U.S. health care continued to grow, reaching $1.4 trillion in 2000, and $3.3 trillion in 2016, and far outpacing other wealthy countries.

How could we better use our excessive health care spending?

There are strong arguments that in a universal health care system, these costs would decrease, as seen in other developed countries. If we reform our health care system to bring our spending in line with other developed countries, we could decrease it by 6% of GDP, and still spend more than many other wealthy nations. This would save $1.2 trillion, or $3,700 per person. These savings would be equivalent to nearly triple the current spending on public K-12 educations and more than triple the current amount spent on infrastructure. As seen in other developed nations, universal coverage would allow America to attain better health outcomes, save money, and provide more services for our country. Updated 6/1/2018

© 2019 by Making Health Care Fair.