Health care spending is rising around the world As far back as we've been measuring this, health care
spending has always risen. Overall spending on health care has doubled over the
past two decades, reaching $8.5 trillion in 2019, which comes out to 9.8% of global GDP. The U.S. spends about twice as much on health care
than other large and wealthy countries do. The U.S. health care system is not as effective when
it comes to controlling costs compared to systems in other countries. The way the system is structured now, it is cure
driven system, not prevention driven system. There is not one access model here in the United
States, and so for preventive services or treatment, it really depends on people's
insurance status, where they're located, and the provider
network near them. It is extremely frustrating for not just patients,
but physicians also The way we do it, by definition, makes things much
more expensive for us. So why are U.S. health care costs rising more than
anywhere else and can it be stopped? Health care spending made up 5% of total U.S. GDP in 1960. In 2020, spending hit almost 20% of total GDP. So what that means is that for every dollar that
people spend in the U.S., about 20 cents is going towards health care. This rise in spending can't be attributed to
inflation alone. Health care almost always outpaces inflation, and so
health care costs grows faster than the economy. That's why it's representing a larger and larger
share of the economy. The United States spends more per person on health
care than other high income countries, but still has a lower life expectancy. We have poor outcomes relative to other countries. We pay twice as much as any other country. We pay more and get less. We see the people in the U.S. use a similar amount of health care to people in
other wealthy and large countries, but we pay more for each interaction. The money's in hospitals and doctors. That's what makes it the big difference between what
we spend on health care in the U.S. and what other countries spend. Hospitals, physicians and clinical care made up more
than half of total health care spending in 2019. When we talk about ways to reduce spending, you can
either look at ways to reduce the amount of care that people are getting or to reduce the price the people
are paying for their care. And in the U.S., it seems that there needs to
be more of a focus on the prices of care because that's
where the real difference is between what we spend in the U.S. and what other people spend in other countries. Drivers of the rise in health care spending has
focused mostly on the symptoms of the rising health care spending. So when we are talking about hospitals, prices are
very high or drug prices as very high. These are not the causes of the high spending. These are the symptoms of high spending. One of the causes of high spending is the fragmented
nature of the U.S. system. Some Americans have incredibly comprehensive
and affordable health insurance coverage, while others have little to no coverage. For some people, they might spend a very small share
of their income on health care, and that's usually because they're healthier. People who are sicker will spend a very large share
of their income on health care, especially if they're in private insurance
coverage with a high deductible plan. Over 11% of the U.S. population was uninsured in 2020, with a large
disparity when it comes to race. 51% of Americans said they have delayed or skipped
medical care due to cost. That number jumps to 63% among those living in
a household with an income of less than $40,000 per year. Even those covered by insurance say they've
experienced financial trouble. About 46% of insured adults reported difficulty
affording out-of-pocket medical costs. The WHO argues in a 2021 report that
universal coverage would limit catastrophic health spending. This lack of universal coverage can make costs rise,
while also leading to worse health care outcomes, specifically when it comes to preventative care. When cost become prohibitive for patients to seek
care is that, number one, preventative care and preventing
diseases from getting worse is always going to cost less, and
the cost meaning to the overall system is always going to cost less. Let's say somebody has no insurance or very little
insurance, and she feels a vague pain on the right side of her abdomen. You know, it would cost her $120 to go to the
doctor. She's not going to do that. She's going to work
through it. And three months later, she's in the emergency room
with a burst appendix. It costs $60,000 and we'll treat her. We'll treat her. But if she could have gone to the
doctor when she felt that first pain, the doc could have treated the infection, it would have
cost a hundred bucks. There is a phenomenon in health care called the cost
shifting, cost shifting happens when health care organizations
shift the cost to those who cannot pay the bill to others who are covered by
insurance providers by increasing the prices somehow. You also have to take into consideration the concept
that you know, maybe 30% of these bills will go unpaid, which can
be thousands of dollars. So at some point, if you want to keep your practice
afloat, those have to be recouped in a different way. This is a factor of the U.S. health care system where, like how much people end
up paying is going to depend on your insurance. A lack of universal coverage and a
fragmented health care system also mean that people don't have the same insurer for their whole lives,
which means that insurers have less of an incentive to provide preventive services or to insure that you
don't get sick later. The majority of Americans don't have much of a choice
when it comes to their insurance plan. More than 54% get health insurance through their
employer. Capitalistic view works when the market is free. Health care is never a free market. Instead, we have insurance companies bidding on
patients behalf, which limits patients ability to bargain with their health care providers. We have what the insurance companies call narrow
networks, where they dictate which doctors you can go to. Patients also can't bargain because they usually
don't know how much care actually costs. One key requirement in a free market is to be
informed about the price of the product or goods you are purchasing. But in health care, patients are in the dark about
what would the cost be when they see their care. Insurance makes prices even more opaque, not just for
patients, but also for doctors. Sometimes it is difficult to know up front what a
patient's costs are going to be for whatever services that they're getting. At the end of the day, we are actually not the ones
controlling the rate for each different company. And even if we have a whole list of every single
possible charge, we don't know if people have met their
deductibles yet. We don't know where they are with respect to
out-of-pocket maximums. We don't know what their co-pay might exactly be if
it's a percentage. A lot of care is delivered through what's called
fee-for-service. That means for every service that your doctor
delivers to you, that doctor is billing for each individual
thing, and that can create an incentive called provider induced demand,
which is basically that your doctor has an incentive to do
more things to you. But it's more complicated than just greed. America's litigious culture can play a role in
excessive testing. I do think that in the United States, we do order
more tests simply because one, there's this fear of missing something. Of course, that comes from a human aspect where you
don't ever want to misdiagnose a patient. But then there's also the malpractice side of things
where if you do miss something, what are the consequences? Since there isn't true free market competition,
insurance companies will try to rein in the spending by either denying claims or requiring
pre-authorization. Most physicians are doing the right thing and
choosing the right treatments for their patients. But sometimes there are instances where
the procedure that's being requested may not always be the most effective
treatment for their particular patient, and sometimes the prior
process also serves as kind of a gatekeeper, so to speak of whether
whether that physician has tried everything that could
potentially help the patient. There are proponents for completely overhauling the
heavily commercialized system. You have to make the commitment to provide health
care for everybody, that's the destination. It turns out there are many different routes to that
destination. One of the more popular policy proposals is Medicare
for All, which would replace for profit insurance companies with government funded health
insurance. I am a strong supporter of Medicare for All because
it is our principle goal in this country to give everyone
coverage at the lowest possible cost, and Medicare is the
best way to do that. President Joe Biden is instead focusing on expanding
the Affordable Care Act to enable more people to get insurance. There's also been a bipartisan push for increased
price transparency. Congress passed the No Surprises Act, which went
into effect in January 2022. The goal of the legislation is to help Americans
avoid surprise medical bills. Now, people who inadvertently go to an out-of-network
provider, for example, by going to an in-network hospital but
being seen by an out-of-network doctor, that patient is held harmless. And then it's up to the insurance company, the
doctor to kind of work out how much gets paid to them. Researchers and economists are still debating what
exactly is driving these costs in the U.S. It's very hard for people to know how much health
care is going to cost them before they get it. Some of that can be addressed through price
transparency efforts by basically posting prices on hospital or Doctors' offices websites. The search has to be intensified in this area to
clearly identify the root causes of the high spending and the interrelationship between the different
routes. There's a lot of moving pieces here, and there's
probably not going to be one single solution to health care costs and access and quality
of care and insurance coverage. But there's a lot of different directions
that policy is starting to go in terms of actually addressing the health care
costs in the U.S.
