Controlling Our Healthcare Costs, Part 1: Statement of the Problem

We are on an unsustainable path when it comes to health care spending. The following is simply brainstorming on how some costs could be contained. This is NOT a proposal.

However, my training has taught me that when you are trying to solve a problem, you first diagnose the true cause, then devise a plan to eliminate the cause. 32% of medical costs are administration costs, one of the biggest costs compared to the administrative costs of Medicare of 6%. It appears that to lower medical costs, we need to reduce administrative costs by changing the system to something like Medicare. Let’s call it Americare.

Our health care system is complex. We in the United States pay far more per person for health care services than other countries yet get on average poorer results. The average cost of healthcare in 21 different countries The “average” results may be deceiving as those who have good health insurance or can otherwise pay out-of-pocket may access the best healthcare services ever available anywhere in the world. Our clinical abilities are second to none. But, those without as good financial means do not have the same access, and many that do have the means live life styles that are not conducive to good health results, bringing down the average results. Nonetheless, the following charts clearly highlight a problem.

“According to data from OECD, the US spent $10,209 on healthcare per capita, or per person, in 2017. That's more than any other country in OECD's 36-country consortium, and over $2,000 more than Switzerland, the second-highest spending country.” Ibid.

“[H]ealth spending in the U.S. has been growing faster than the other OECD countries in spite of efforts to control spending in the U.S. Overall U.S. health spending increased at an average rate of 2.8 percent annually between 2000 and 2016, which is greater than the OECD median annual increase of 2.6 percent. Per capita, inflation-adjusted spending on pharmaceuticals also increased much more quickly in the U.S.—at a rate of 3.8 percent per year, compared to just 1.1 percent for the OECD median.

During the same period, U.S. gross domestic product (GDP) per capita increased by only 0.9 percent annually, which means that health care continues to represent a larger share of GDP. U.S. health care spending in 2016 totaled 17.2 percent of GDP, compared to just 8.9 percent for the OECD median.” U.S. Health Care Spending Highest Among Developed Countries

In 2017, U.S. health care spending grew 3.9%, reaching $3.5 trillion or $10,739 per person, according to the Centers for Medicaid and Medicare Services (CMS). That accounts for about 17.9% of the nation’s GDP. Millions of Americans with employer health care are still spending a fortune