If You Think Healthcare Is Expensive Now.....
The Department of Health and Human Services released new data yesterday on healthcare spending and it reported that total health expenditures reached $2.3 trillion in 2008, or $7,681 per person. As a share of GDP, healthcare expenditures set a new record of 16.2%, which is double the 8.1% share of GDP in 1975, and more than three times the 5.2% share in 1960 (see chart above).
The chart below (data here) shows what might be the two most important reasons for rising healthcare costs over the last 50 years: a) declining out-of-pocket payments for medical expenses, which have fallen from 47% of total health spending in 1960 to a record low of only 11.9% in 2008, and b) expanding public funding of healthcare, which reached a record high of 47.3% in 2008. There’s now been a complete reversal—whereas consumers paid 47% of total medical costs in 1960, it’s now the government paying 47% of health spending, while consumers pay less than 12% out of pocket for healthcare. That reversal is a guaranteed prescription for rising healthcare expenditures.
Unfortunately, under the proposed healthcare overhaul we’ll likely see a continuation of the trends displayed in the graphs—more government funding of the nation’s healthcare expenditures, less out-of-pocket spending by consumers, and rising healthcare costs as a share of GDP. If you think healthcare is expensive now, just wait until you see what happens after 2,000 pages of healthcare “reform.”
Read more at The Enterprise Blog.