USA Paying More for Health Care

Posted on September 11, 2007  Comments (7)

The USA health care system is well known as by the most costly in the world. Most also agree the system provides far from the best results – perhaps great results could justify such high prices but that is not the case (though some still argue this point). Decades ago W. Edwards Deming targeted high health care costs as a deadly disease of the US economy decades ago and the problem has just gotten worse almost every single year since. In the last few year the “good news” is that while health care costs are still rising above the rate of inflation above the growth in the economy the rate of the increases were declining. From the Kaiser Foundation news release:

Premiums for employer-sponsored health insurance rose an average of 6.1 percent in 2007, less than the 7.7 percent increase reported last year but still higher than the increase in workers’ wages (3.7 percent) or the overall inflation rate (2.6 percent), according to the 2007 Employer Health Benefits Survey

The 6.1 percent average increase this year was the slowest rate of premium growth since 1999, when premiums rose 5.3 percent. Since 2001, premiums for family coverage have increased 78 percent, while wages have gone up 19 percent and inflation has gone up 17 percent. The average premium for family coverage in 2007 is $12,106, and workers on average now pay $3,281 out of their paychecks to cover their share of the cost of a family policy.

Luckily some good work is being done but so much more is needed. Seeing figures like these should make people understand this system is broken and needs to be fixed. This has been a known seriously problem for quite a long time. It is very difficult for an economy to sustain such large negative factor in economic performance. Luckily the USA has a strong enough economy to sustain a large negative impact from the health care system (it is also able to overcome: a huge amount of government and consumer borrowingludicrasly overpaid senior executives). This situation is very similar to a company being able to sustain waste in one part of the company. It might be possible to survive that way today, but it is something to avoid, and there is no certainty how long sustaining that waste can continue before it overwhelms the companies ability to cover for the waste elsewhere.

Related: USA Health System Now Costs 16% of GDP (2007) – the highest % everPBS Documentary: Improving HospitalsPerformance of the USA Health Care System to OthersSeven Leadership Leverage PointsImproving the Health Care System ArticlesUSA Health Care Costs reach 15.3% of GDP (2005)Drug Prices in the USAChange Health Care

7 Responses to “USA Paying More for Health Care”

  1. Traveling for Health Care at Curious Cat Investing and Economics Blog
    October 28th, 2007 @ 7:43 pm

    […] guess is that traveling for health care is going to increase greatly in the future. Health costs in the USA are enormous. Costs in Europe are different – often in wait time (or costs to avoid waiting) but another option […]

  2. CuriousCat: Drug Price Crisis
    March 17th, 2008 @ 5:50 pm

    “The mounting U.S. drug price crisis can be contained and eventually reversed by separating drug discovery from drug marketing and by establishing a non-profit company to oversee funding for new medicines…”

  3. CuriousCat: USA Spent $2.1 Trillion on Health Care in 2006
    October 7th, 2008 @ 11:29 pm

    The percent of GDP spent on health care in the USA increased again in 2006 – to 16%. Health care spending reached a total of $2.1 trillion, or $7,026 per person in 2006…

  4. International Health Care System Performance at Curious Cat Investing and Economics Blog
    October 25th, 2008 @ 9:39 am

    National health spending as percent of GDP: Australia 9.5%, Canada 9.8%, Germany 10.7%, UK 8.3%, USA 16.0%…

  5. Medical Debt Increases as Economy Declines at Curious Cat Economics Blog
    January 13th, 2009 @ 5:36 pm

    Unwilling to wait for federal action, a handful of states, most notably Massachusetts, have passed laws designed to expand health coverage or to protect medical debtors. An Illinois law passed last year caps rates that hospitals can charge the uninsured…

  6. CuriousCat: USA Spent $2.2 Trillion or $7,421 Per Person on Health Care in 2007
    March 16th, 2009 @ 8:55 am

    “The costs for health services and supplies for 2007 were distributed among businesses (25%), households (31%), other private sponsors (4%), and governments (40%)…”

  7. USA Spends $7,960 Compared to Around $3,800 for Other Rich Countries on Health Care with No Better Health Results at Curious Cat Investing and Economics Blog
    January 26th, 2012 @ 5:29 pm

    […] Measuring the Health of Nations – USA Paying More for Health Care – Traveling for Health Care – resources for improvement health system performance […]

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