Health Care Costs

According to Reuters, “The United States spends more on healthcare than any country in the world but has higher rates of infant mortality, diabetes and other ills than many other developed countries.”

Every year, without fail, spending for services covered by private health insurance increases. Sometimes health care spending grows slowly, as it did in the mid-1990s during the managed-care boom. But more often, it increases rapidly, as it is doing now — in part because of the managed-care bust.
Between 1999 and 2003, the per capita spending for services covered by private health insurance increased by 39 percent. Given that the average hourly earnings of U.S. workers increased by only percent during that period (see FigureFigureAnnual Percent Changes per Capita in Health Care Expenditures and in Average Hourly Wages for Workers in All Industries, 2000 through 2003.), affordability is an acute and growing concern.

The simple explanation for rapidly increasing health care costs is that people are getting more care, much of which is associated with new medical technologies. But many experts have doubts about the value of some of this care in relation to its cost. And when health care costs increase at a much faster rate than incomes, many people — especially those with low incomes — can no longer afford insurance coverage.

Reporting from Washington — In a stark reminder of growing costs, the government has released a new estimate that healthcare spending grew to a record 17.3% of the U.S. economy last year, marking the largest one-year jump in its share of the economy since the government started keeping such records half a century ago.
The almost $2.5 trillion spent in 2009 was $134 billion more than the previous year, when healthcare consumed 16.2% of the gross domestic product, according to an annual report by independent actuaries at the federal Centers for Medicare and Medicaid Services, or CMS, scheduled for release Thursday.
Considering the national health-care discussion in Congress, it doesn't appear that reform is on the way. Because while the Congressional debate over the national health-care plan focuses on reforming America's employer-based insurance system and adding a "public option" of Government-provided health insurance, these debates are akin to rearranging the deck chairs on the Titanic if our total health costs don't drop dramatically, and soon.

While supporters of the health-care bill claim it will eventually lead to costs savings, analysts have questioned these projections. The federal Centers for Medicare and Medicaid Services found that the proposed legislation would do little to stem the rise in health-care expenditures, according to the CFR report.

Critics such as Fred Barnes of the Weekly Standard claim that the highly complex plan "low-balls costs and exaggerates the means for paying for it." The bill purports to cut the $1.5 trillion Federal budget deficit by $118 billion, but actually will end up borrowing hundreds of billions of dollars more, Barnes says.


  1. Greater access to generic drugs reduces health care costs because the price of generic drugs is typically much lower than that of the prescription drugs. Purchase only on certified online pharmacies.

  2. Peoples want to control health care costs by just not paying for health care that low and moderate income people can't afford. They're the real death panel. Democrats are all confused and conflicted, in part because hospitals and doctors and drug companies all give them money to keep the gravy train flowing.

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