Why Are U.S. Healthcare Costs So High? Essay

4542 Words Mar 16th, 2014 19 Pages
Why Are U.S. Health Care Costs So High?
Overview of the High Cost of Health Care


Alaska Pacific University
MBA 63600
Health Service Systems and Policies
Fall 2013

Why Are U.S. Health Care Costs So High? According the Department of Health and Human Services, total health care spending in the U.S. 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 percent. That’s double the 8.1 percent share of GDP in 1975, and it is triple the 5.2 percent share of GDP in 1960. (Perry, 2010) Last year in 2012, total U.S. health care spending hit $2.807 trillion, or $8,948 per person. (Geisel, 2013) Its rate of increase has been relatively low since 2009, at
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By this graph it’s easy to see that the U.S. obviously spends much more on health care in comparison to its GDP. But what accounts for this? Is it because Americans are sicker? Do we use more health care because we are wealthier? Is it just because everything costs more in this country? Or do other countries have tighter cost controls and the U.S. has out-of-control costs?

To answer the question of whether higher spending is just a result of the U.S. being wealthier, the same data was analyzed by the Organization for Economic Cooperation and Development with per capita GDP vs. per capita spending. The resulting graph also contains an extrapolated line called “estimated spending according to wealth”. The point made by the data graph below is that a majority of health care spending is based on per capita GDP, or wealth. However, unlike most other countries which fall on or near the predicted line, the U.S. is prominently skewed even higher than what would be because of wealth. The argument made by Uwe E. Reinhardt (Reinhardt) explained by Aaron Carroll in his article, is that the amount that the U.S. is above this line is actually wasteful spending. Graph Taken from: (Carroll, 2010)
Common Additional Comparisons to Other Countries In addition to these measures against GDP, most researchers cite that the U.S. does not necessarily have better health outcomes or quality, using certain metrics, as other developed countries. Most notable are life expectancy

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