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Recursion

(56,582 posts)
Wed Dec 11, 2019, 06:34 AM Dec 2019

It's time for your favorite game show: What Do We Spend On Healthcare?

It's time again for your favorite game show: What Do We Spend On Healthcare? (Download and unzip the "NHE Tables" link to play along at home.)

In 2018, the US spent $3.649 Trillion on healthcare, or 17.8% of our GDP.

What did we spend it on? Great question. This is the breakdown:

Hospital care: $1.192 Tn
Physician and clinical services: $726 Bn
Dental services: $136 Bn
Other professional services: $104 Bn
Residential and personal care (not through hospitals): $192 Bn
Home health care (not through hospitals): $102 Bn
Nursing, continuing, and retirement care: $166 Bn
Pharmaceuticals: $335 Bn
Durable equipment: $55 Bn
Consumable equipment: $66 Bn
Public insurance overhead: $48 Bn
Private insurance overhead (including profit): $259 Bn
Public health: $94 Bn
Research (excluding pharmaceuticals and devices): $53 Bn
Structures: $122 Bn

Where did the money come from? Another great question. It came from these sources:

Out of pocket: $376 Bn
Private insurance: $1.243 Tn
Medicare: $750 Bn
Medicaid - Federal: $371 Bn
Medicaid - State & Local: $227 Bn
CHIP/DoD/VA: $138 Bn
Other 3rd party payers: $371 Bn
(That last one is a big grab-bag: worksite health care, the Indian Health Service, workers' comp, schoolsite health care, etc.)

A couple of thoughts:

1. Private insurance takes in about $1.2 Trillion and pays out about $1 Tn. That makes it a bigger player in health care than
any given government program, but about the size of Medicare and Medicaid put together.

2. Private insurance overhead (including profit) is $259 Bn, or 20%, of which $164 Bn is paid by patients, and $95 Bn is paid by the Government

3. Public insurance overhead is quite variable by program: Medicare is $53 Bn or 7%, while Medicaid is $65 Bn, or 10% (I don't know where the "2% overhead for Medicare" talking point came from; maybe that it's 2% of total expenditures, or that Medicare's overhead is 2.5% if you discount payments to provisioning insurers)

4. States aren't paying much here; they pay slightly less than half of Medicaid and that's about it. By contrast, Canada's provinces fund about three-quarters of their social insurance system. (Though interestingly Canada's out-of-pocket payment rate is about the same as ours.)

5. Holy hell, hospitals make a lot of money.

6. If you downloaded the data tables, you might want to look at Table 4: Expenditures by Type and Source, which will show you how much of e.g. Medicaid went to nurshing home care vs. physician services, and so on.

7. It's not clear to me where we're going to find the $1.8 Trillion dollar savings people are talking about finding.

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It's time for your favorite game show: What Do We Spend On Healthcare? (Original Post) Recursion Dec 2019 OP
Thanks Midnightwalk Dec 2019 #1
We've got to address hospitals, one way or another Recursion Dec 2019 #2

Midnightwalk

(3,131 posts)
1. Thanks
Wed Dec 11, 2019, 10:34 AM
Dec 2019

Bookmarked to find later.

That 20% is the medical loss ratio of the ACA. I’ve thought that could be an incentive to not negotiate better prices. But they’d all have to arrive at the same high price or lose customers to another a competitor.

Hospital care makes me wonder. That would include drugs, equipment like cat scans, nursing that is also included separately. I’m not suggesting double counting but couldn’t that be a reason that category is so high? Maybe the spreadsheets break it down in enough detail.

Funny how hospitals have the same 20% profit margin as insurance companies. Note that the same service probably gets marked up multiple times. Pharmaceutical company double their price compared to other countries. The hospital marks it up again for their cut and the insurance sets premiums 20% higher than that. Every one in the path of delivering a service tacks on a fee and gets their cut.

They’ve even added steps into that by the way. To get a drug i need, my insurance company makes me call a pharmacy company to get the drug delivered to the hospital pharmacy so i can get it The hospital pharmacy is fully equipped to order it themselves but that would eliminate the pharmacy company payroll and profits.

I’ve been using 1 trillion as what we should be aspiring to save and saying that is going to be difficult and take time to achieve. It can’t all come from reducing the insurance company cut of the profits but that is a piece of it. Indirectly because I think they provide cover for everyone in the delivery path to take their cuts. But other costs such as over testing, end of life care, and even malpractice will have to be addressed

Recursion

(56,582 posts)
2. We've got to address hospitals, one way or another
Wed Dec 11, 2019, 10:40 AM
Dec 2019

The problem is that's politically poisonous. We have too many hospitals (twice as many per capita as Canada or the UK) but they're in the wrong places -- and as an example of how far back this problem goes, many of them are where they are because the miasma theory of infection made people want to build them on high ground back in the day. But God help the politician or administrator who says "we need to close this hospital".

Physicians are also an issue. We have 2.6 per mille, which is "right" by OECD standards, but 75% of them are specialists and 25% are GPs, while the rest of the OECD has that ratio reversed. And not enough of these physicians are out in the boondocks. So we need some way to convince highly-paid pediatric nephrologists in NYC to go be less-highly-paid GPs in Bumblefuck, Iowa, which also isn't a politically easy thing to do.

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