National Health Care Spending in the United States

Topics: Health economics, Universal health care, United States Pages: 5 (1841 words) Published: June 10, 2012

National Health Care Spending in the United States

Bill Obert

June 3rd, 2012
University of Phoenix

National Health Care Spending in the United States

When the United States first began keeping statistical; data on national health expenditures in 1960, the population of the time was estimated at a mere 186 million people, with a national health care cost of approximately $27 billion dollars. In a short amount of time of only twenty years, the national health care costs increased about nine times the amount to $256 billion dollars in 1980, with a population of 230 million. In most recent data, 2010 spending is over ten times the 1980 spending; $2.6 trillion dollars for a U.S. population of 309 million people (Centers for Medicare and Medicaid Services, 2012). While the rate of growth from 1990 to the new millennium have somewhat slowed, it is still expected to grow beyond the national income into the foreseeable future (Henry J. Kaiser Family Foundation, 2012). According to the Kaiser Family Foundation’s research on individual costs, about 51% of the health care costs are directed towards hospital care, at 31%, and physician and clinical services at 20% (Henry J. Kaiser Family Foundation, 2012). Other costs include: investments at 6%, medications at 10%, nursing home care at 5%, and government administration costs at about 1%. The rest being spent in small proportions to various other sectors of health care.

Too Much Spending or Not Enough?

The argument on health care spending comes two fold; there are numerous critics that say spending is too much while others argue not nearly enough. However, it is a fact that the United States spends more on national health care than any other industrialized and developed nation. Over 17% of the United States’ GDP goes towards health care costs (Johnson, 2012). Critics arguing for less spending say that this is too much, and costs are rising because of government spending itself, which inhibits private sector competition and bringing down market values (Roy, 2011). Compounding the issue is the ineffectiveness of high-cost medications Despite the high costs of health care, the United States’ longevity is not on par with countries that live longer on less, and some critics say that this is the result of high costing medications that have little to no beneficial yield in their application. An example of this is modern cancer medications, which can range up to $50,000 or more while having no results. At last estimate, a vaccine for Dendreon’s Provenge cancer costs around $93,000, regardless if it works or not, and it is virtually impossible to determine the effectiveness because the vaccination neither shrinks the tumor or slows the progression of the cancer by any measurable way (Langreth, 2011). Arguments supporting more spending usually surrounds technology. Many of the procedures covered today, while medically sound, are also based on older more traditional methods which can usually yield better results, but are not cost effective. Most insurance companies only wish to pay for something that has enough clinical evidence to support the expense and, while this is understandable from a scientific point-of-view, medical science does not necessarily work the same to solve each patient’s needs. Numerous cheaper alternatives to the traditional methods exist, yet are omitted because they lack evidentiary support, creating a proverbial catch-22. Example can be taken from Dr. Charles Kelman, who developed the modern way in which cataract removal is performed. What was once a bloody and painful surgery, requiring large glasses for life, can now be carried out painlessly and within 10 minutes. However, at the time the technology was being developed by Dr. Kelman, according to modern medical standards, his technology would have never been funded or accepted because the initial...

References: Avik, Roy. (2011, February 10). It’s Easy to Waste Other People’s Money: A Forbes Conversation on Health Costs. Retrieved from
Blanchette, C. & Tolley, E. (2001). Public and Private Sector Involvement In Health-Care Systems: A Comparison of OECD Countries. Retrieved from
Centers for Medicare and Medicaid Services. (2012). Office of the Actuary – National Health Care Expenditures Data [Data file]. Retrieved from
Henry J. Kaiser Family Foundation. (2012). Background Brief – U.S. Health Care Costs. Retrieved from
Johnson, Toni. (2012, March 26). Healthcare Costs and U.S. Competitiveness. Retrieved from
Langreth, Robert. (2011, February 9). $100,000 Cancer Drugs, Ineffective $50,000 Back Operations, Unnecessary MRI Scans Will Bankrupt America: A Forbes Conversation. Retrieved from
National Conference of State Legislatures. (2012, March). Certificate of Need: State Health Laws and Programs. Retrieved from
Whelan, David. (2011, February 13). We Probably Spend Too Little On Health care (Unless You’re Peter Orszag). Retrieved from
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