The good news is that the United States is able to devote more spending to health care than any other country in the world. The bad news is that the United States spends more on health care than any other country in the world.
Why Does Health Care Cost So Much?
According to a recent report published in the Journal of the American Medical Association, Americans spent $2.9 trillion in 2014, representing over 17 percent of the total economy. On a per capita basis, American consumers, employers and insurers together spent more than $9,110 per person. Naturally, these spending levels eventually must be reflected in health insurance premiums, taxes, reduced savings or budget deficits.
Top Spending Categories
What are we spending so much money on? Cardiovascular disease topped the list: The cost of treating general cardiovascular disease reached more than $231 billion in 2013 – and that doesn’t even include treating high cholesterol and high blood pressure. 57.3 percent of this spending was for inpatient services, and 65.2 percent was for Medicare and other patients ages 65 and older.
The second most expensive disease that year was diabetes, urogenital, blood and endocrine-related diseases. Treating these diseases consumed more than $224 billion in 2013, reports the Journal. This spending was distributed relatively evenly between inpatient, ambulatory care and retail drug expenses.
Other Highlights
Spending on musculoskeletal disorders is increasing fast – accelerating some 5.4 percent in 2013, the year covered by the study.
More personal health care spending was devoted to managing diabetes than any other condition, with the common condition costing Americans as much as $101.4 billion in 2013. Those aged 45 and older represented 87.1 percent of spending.
Ischemic heart disease (IHD) accounted for $88.1 billion, mostly in inpatient care settings. Again, IHD spending excludes spending on high blood pressure and cholesterol management. Spending on these two risk factors alone accounted for 83.9 billion and $51.8 billion, respectively.
Lower back and neck pain was the third most expensive category of healthcare spending, costing Americans up to 87.6 billion.
While no single form of cancer dominated the list of the most expensive conditions for the American health care system, the Agency for Healthcare Research and Quality estimates that 2013 direct care cancer costs reached $74.8 billion, out of which 43.7 percent was spent on outpatient treatment, 39.7 percent on hospital stays and 11.7 percent on prescription drugs.
Overall, the cost of cancer treatment is expected to reach $158 billion by the year 2020, according to the National Institutes of Health.
What You Can Do
The best thing most individuals can do is manage their diet and exercise to maintain a normal and healthy weight, as well as cease smoking. These actions alone substantially reduce the risk of most of the costliest medical conditions. Obesity alone is thought to be responsible for more than $200 billion per year in excess health care costs, according to Harvard University research – or about 21 percent of all health care spending.
At the individual level, obesity is extremely expensive: Obese people spent $2,741 more per person per year, on average, than non-obese people – a difference of 150 percent.
Meanwhile, the Centers for Disease Control & Prevention calculate that smoking costs more than $170 billion in directed medical care costs each year, spread across several medical conditions.
To learn more, discuss with a UBF consultant about how an employer sponsored health management strategy can truly deliver lower costs over the long term.
Alan Wang is the President of UBF and serves as the lead consultant. He has delivered the UBF solution set throughout the world and is highly regarded for his areas of expertise. You can follow him on Twitter @UBFconsulting.