WHAT COSTS $282 MILLION AN HOUR?

February 5, 2010

The United States spent $2.472 trillion on health care last year, according to a paper published this week in the journal Health Affairs.  That's $282 million an hour, says the Wall Street Journal. 

  • Health spending as a percent of gross domestic product (GDP) -- a key metric that shows how much of all U.S. spending goes to health care -- rose from 16.2 percent in 2008 to 17.3 percent in 2009, far higher than any other industrialized country.
  • That's the largest one-year increase since 1960, when the feds started closely tracking national health expenditures. 

The figure went up so much because health spending continued to rise, even as the overall economy shrank.  The aging population accounted for a small part of this rise, but two other factors were more important: rising prices and increasing use, says the Journal: 

  • Health care prices rose by 3.2 percent in 2009, according to the Health Affairs paper, significantly faster than prices rose for the overall economy.
  • Utilization, which includes both volume and intensity of health care services, rose by 1.5 percent. 

The share of health care spending paid for by the government (through programs such as Medicare and Medicaid) is also rising, and is projected to cross the 50 percent threshold soon. 

For the first time, government programs next year will account for more than half of all U.S. health care spending, federal actuaries predict, as the weak economy sends more people into Medicaid and slows growth of private insurance, says the Journal: 

  • Over the next 10 years, health spending is expected to balloon to $4.5 trillion.
  • Government health programs are a growing burden on the federal budget, which is running annual deficits of more than $1 trillion, and rising health costs continue to batter private industry.
  • By 2020, according to the new projections, about one in five dollars spent in the United States will go to health care, a proportion far beyond any other industrialized nation. 

"It's going to be a desperate issue five to 10 years out," says Gail Wilensky, the former top Medicare official in the George H.W. Bush administration.  She says the United States will have to decide soon between raising revenue to pay for Medicare or reducing benefits. 

Source: Editorial, "What Costs $282 Million an Hour?" Wall Street Journal, February 4, 2010; and Peter Landers, "Public Health Tab to Hit Milestone," Wall Street Journal, February 4, 2010. 

For editorial:

http://blogs.wsj.com/health/2010/02/04/what-costs-282-million-an-hour/  

For Landers text:

http://online.wsj.com/article/SB10001424052748703575004575043490639289022.html 

 

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