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Health care spending in U.S. exceeds costs of other countries

By Wikipedia

Current estimates put U.S. health care spending at approximately
16% of GDP, second only to East Timor (Timor-Leste) among all
United Nations member nations.[7] The health share of GDP is
expected to continue its historical upward trend, reaching 19.5
percent of GDP by 2017.[33][34] Of each dollar spent on health care
in the United States 31% goes to hospital care, 21% goes to
physician services, 10% to pharmaceuticals, 8% to nursing homes, 7%
to administrative costs, and 23% to all other categories
(diagnostic laboratory services, pharmacies, medical device
manufacturers, etc.[23]

The Office of the Actuary (OACT) of the Centers for Medicare and
Medicaid Services publishes data on total health care spending in
the United States, including both historical levels and future
projections.[35] In 2007, the U.S. spent $2.26 trillion on health
care, or $7,439 per person, up from $2.1 trillion, or $7,026 per
capita, the previous year.[36] Spending in 2006 represented 16% of
GDP, an increase of 6.7% over 2004 spending. Growth in spending is
projected to average 6.7% annually over the period 2007 through
2017. Health insurance costs are rising faster than wages or
inflation, and medical causes were cited by about half of
bankruptcy filers in the United States in 2001.[37]

The Congressional Budget Office has found that “about half of
all growth in health care spending in the past several decades was
associated with changes in medical care made possible by advances
in technology.” Other factors included higher income levels,
changes in insurance coverage, and rising prices.[38] Hospitals and
physician spending take the largest share of the health care
dollar, while prescription drugs take about 10 percent.[39] The use
of prescription drugs is increasing among adults who have drug
coverage.[40]

One analysis of international spending levels in the year 2000
found that while the U.S. spends more on health care than other
countries in the Organisation for Economic Co-operation and
Development (OECD), the use of health care services in the U.S. is
below the OECD median by most measures. The authors of the study
concluded that the prices paid for health care services are much
higher in the U.S.[41]

Health care spending in the United States is concentrated. An
analysis of the 1996 Medical Expenditure Panel Survey found that
the 1% of the population with the highest spending accounted for
27% of aggregate health care spending. The highest-spending 5% of
the population accounted for more than half of all spending. These
patterns were stable through the 1970s and 1980s, and some data
suggest that they may have been typical of the mid-to-early 20th
century as well.[42][43] One study by the Agency for Healthcare
Research and Quality (AHRQ) found significant persistence in the
level of health care spending from year to year. Of the 1% of the
population with the highest health care spending in 2002, 24.3%
maintained their ranking in the top 1% in 2003. Of the 5% with the
highest spending in 2002, 34% maintained that ranking in 2003.
Individuals over age 45 were disproportionately represented among
those who were in the top decile of spending for both
years.[44]

Health care cost rise based on total expenditure on health as %
of GDP. Countries are USA, Germany, Austria, Switzerland, United
Kingdom and Canada.

Seniors spend, on average, far more on health care costs than
either working-age adults or children. The pattern of spending by
age was stable for most ages from 1987 through 2004, with the
exception of spending for seniors age 85 and over. Spending for
this group grew less rapidly than that of other groups over this
period.[45]

The 2008 edition of the Dartmouth Atlas of Health Care[46] found
that providing Medicare beneficiaries with severe chronic illnesses
with more intense health care in the last two years of
life-increased spending, more tests, more procedures and longer
hospital stays-is not associated with better patient outcomes.
There are significant geographic variations in the level of care
provided to chronically ill patients. Only a small portion of these
spending differences (4%) is explained by differences in the number
of severely ill people in an area; rather, most of the differences
are explained by differences in the amount of “supply-sensitive”
care available in an area. Acute hospital care accounts for over
half (55%) of the spending for Medicare beneficiaries in the last
two years of life, and differences in the volume of services
provided is more significant than differences in price. The
researchers found no evidence of “substitution” of care, where
increased use of hospital care would reduce outpatient spending (or
vice versa).[46][47]

Increased spending on disease prevention is often suggested as a
way of reducing health care spending.[48] Research suggests,
however, that in most cases prevention does not produce significant
long-term costs savings.[48] Preventive care is typically provided
to many people who would never become ill, and for those who would
have become ill is partially offset by the health care costs during
additional years of life.[48]

In September 2008 The Wall Street Journal reported that
consumers were reducing their health care spending in response to
the current economic slow-down. Both the number of prescriptions
filled and the number of office visits dropped between 2007 and
2008. In one survey, 22% of consumers reported going to the doctor
less often, and 11% reported buying fewer prescription
drugs.[49]

[edit] Health care payment

In the United States, doctors and hospitals are generally funded
by payments from patients and insurance plans in return for
services rendered.

Around 84.7% of citizens have some form of health insurance;
either through their employer or the employer of their spouse or
parent (59.3%), purchased individually (8.9%), or provided by
government programs (27.8%; there is some overlap in these
figures).[1] All government health care programs have restricted
eligibility, and there is no government health insurance company
which covers all citizens. Americans without health insurance
coverage at some time during 2007 totaled about 15.3% of the
population, or 45.7 million people.[1]

Among those whose employer pays for health insurance, the
employee may be required to contribute part of the cost of this
insurance, while the employer usually chooses the insurance company
and, for large groups, negotiates with the insurance company.

In 2004, private insurance paid for 36% of personal health
expenditures, private out-of-pocket 15%, federal government 34%,
state and local governments 11%, and other private funds
4%.[50]

Insurance for dental and vision care (except for visits to
ophthalmologists, which are covered by regular health insurance) is
usually sold separately. Prescription drugs are often handled
differently than medical services, including by the government
programs. Major federal laws regulating the insurance industry
include COBRA and HIPAA.

Individuals with private or government insurance are limited to
medical facilities which accept the particular type of medical
insurance they carry. Visits to facilities outside the insurance
program’s “network” are usually either not covered or the patient
must bear more of the cost (usually waived for emergencies).
Hospitals negotiate with insurance programs to set reimbursement
rates; some rates for government insurance programs are set by law.
The sum paid to a doctor for a service rendered to an insured
patient is generally less than that paid “out of pocket” by an
uninsured patient. In return for this discount, the insurance
company includes the doctor as part of their “network”, which means
more patients are eligible for lowest-cost treatment there. The
negotiated rate may not cover the cost of the service, but
providers (hospitals and doctors) can refuse to accept a given type
of insurance, including Medicare and Medicaid. Low reimbursement
rates have generated complaints from providers, and some patients
with government insurance have difficulty finding nearby providers
for certain types of medical services.

Charity care for those who cannot pay is sometimes available
from any given medical facility, and is usually funded by
non-profit foundations, religious orders, government subsidies, or
services donated by the employees. Massachusetts and New Jersey
have programs where the state will pay for health care when the
patient cannot afford to do so.[51] The City of San Francisco is
also implementing a citywide health care program for all uninsured
residents, initially available to those whose incomes are below an
eligibility threshold. Some cities and counties operate or provide
subsidies to private facilities open to all regardless of the
ability to pay, but even here patients who can afford to pay or who
have insurance are generally charged for the services they use.

The Emergency Medical Treatment and Active Labor Act requires
virtually all hospitals to accept all patients, regardless of the
ability to pay, for emergency room care. The act does not provide
access to non-emergency room care for patients who cannot afford to
pay for health care, nor does it provide the benefit of preventive
care and the continuity of a primary care physician. Emergency
health care is generally more expensive than an urgent care clinic
or a doctor’s office visit, especially if a condition has worsened
due to putting off needed care. Emergency rooms are typically at,
near, or over capacity. Long wait times have become a problem
nationally, and in urban areas some ERs are put on “diversion” on a
regular basis, meaning that ambulances are directed to bring
patients elsewhere.[52]

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