NCPA - National Center for Policy Analysis

Government Health Spending Growth Outstrips Private Sector Growth

February 13, 2015

When the government gets involve in health care, what happens to spending? At the NCPA Health Policy Blog, Senior Fellow Linda Gorman has analyzed public and private health care spending in the United Kingdom and in the United States. The results?

  • From 2000 to 2012, inflation-adjusted public spending on health care in the United Kingdom increased by 68 percent, while private spending increased by 26 percent during that period.
  • At the same time, the United Kingdom had a 7 percent increase in population growth.
  • In the United States, public health care spending rose 67 percent from 2000 to 2012. Over that same time period, spending in the private sector rose 44.5 percent.
  • At the same time, the United States had a 9.7 percent increase in population.

Gorman says public health spending in the United States includes spending on Medicare, Medicaid, the Veterans Administration, the Department of Defense health program, school health programs, the Children\'s Health Insurance Program, workers\' compensation and more.

In short, it's difficult for the public sector to control health care spending. What does limit spending? Giving consumers more control over their own health care dollars. For example, health savings accounts (HSAS) have been shown to reduce consumer spending on health care. Why? People are always more careful with their own dollars than with someone else's, and when patients have control over their money, they look for cost-effectiveness. In a health care system in which a third party is paying for someone's health care, patients face less incentives to reduce costs or limit their spending

Source: Linda Gorman, "Government Health Spending Growth Outstrips Private Sector Growth in Both the UK and the US," NCPA Health Policy Blog, February 10, 2015. 

 

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