Americans are getting a good return on their healthcare spending
December 29, 2020
The Centers for Medicare and Medicaid Services released new data on Dec. 16 on health expenditures. In 2019, overall spending rose 4.6% to reach a total of $3.8 trillion, or 17.7% of the economy.
That’s enough to make anyone do a double take. But a deeper look at the data actually shows we’re getting a lot of value out of all that spending.
Hospital care and physician and clinical services accounted for over 50% of spending. Spending in those two categories grew at a slightly faster rate in 2019 than in 2018. But CMS noted that “nonprice factors such as the use and intensity of services” were key contributors to that steeper growth rate.
In other words, spending went up, in part, because people visited the hospital and doctor more often.
Another reason health expenditures are high is that people tend to demand top-notch accommodations from their healthcare system. For example, private hospital rooms tend to be the norm in the United States. In Canada, government insurance only covers a hospital stay in a ward with multiple beds and shared bathrooms. If a patient wants a private or semi-private room (if one is even available), they may have to pay for it on their own.
Patients in the U.S. also have better access to the latest medical technology than their counterparts abroad. That technology isn’t cheap. The U.S. has 40 MRI machines per million people. Canada, by contrast, has just 10 per million. It’s no wonder Canadians face a median wait of 11 weeks for an MRI, according to data released this month by the Fraser Institute, a Canadian think tank.
Healthcare spending may be on the rise. But the value we get for that spending is undeniable.
Sally C. Pipes is president, CEO, and Thomas W. Smith fellow in Health Care Policy at the Pacific Research Institute. Her latest book is False Premise, False Promise: The Disastrous Reality of Medicare for All (Encounter 2020). Follow her on Twitter @sallypipes.