Healthcare Spending Increases To 18.2% of GDP

 

Stanley Feld M.D.,FACP, MACE

 

Healthcare spending has increased each year. Healthcare spending is now 18.2% of the GDP up from 17.7% in 2014.

In 2000 it was 14% of the GDP.

The data presented in the following charts are partially correct. They are derived from clams data which are also partially correct. The charts can give an idea on how the healthcare money is

spent. and wasted.

Wasted Money

Drivers of increased Healthcare Spending

Distribution of Healthcare Spending

There are many reasons for this increase. The Obama administration prefers to blame the increasing spending on his most popular reasons.

His reasons might not be completely true.

The traditional media then publicizes the President Obama’s popular reasons. The reasons get translated into public understanding and public opinion.

President Obama’s reasons for the increased healthcare spending are hospitals’ and physicians’ prices are increasing. Hospital and physician retail prices are increases. However, their insurance reimbursement has decreased. Public opinion then demands that physicians decrease their prices.

The reality is physician reimbursement has been steadily declining in recent years as spending has been increasing.

I have continually pointed this out.

Medicare, Medicaid and private insurance have forced physicians to accept lower reimbursement. Patients are increasingly discovering that “my doctor doesn’t take my insurance or my Medicare or my Medicaid.”

Consumers without insurance coverage are charged retail price by hospitals and physicians rather than the discounted prices hospitals and physicians accept.

These consumers can try to negotiate the prices. They are usually more successful with physicians than hospitals.

Decreasing reimbursement is one of the main reasons physicians are driven to see more and more patients in less and less time.

Physicians must continue to pay overhead and salaries.

This phenomenon of increased patient volume disrupts the magic of the physician/patient relationship. It is also the driving force behind the massive increase in concierge medicine.

If it is not the rise in physician reimbursement, what is the reason for the increase in healthcare spending?

There are several possibilities.

1. GDP is increasing at a lower rate than healthcare spending.
2. Consumers are sicker. They need more medical and surgical care than previously.
3. Healthcare insurance premiums are increasing at a greater rate than the GDP.
4. Bureaucratic support of the healthcare system is growing at a greater rate than the GDP.
5. Pharmaceutical use is increasing because a sicker population needs more drugs.
6. RNA Technology has lead to the discovery of more potent therapies that are costly to the healthcare system.

Statistics published by the Altarum Institute in July suggest that President Obama and his fans in the traditional media reevaluate their premises about the rising healthcare spending.

“Out-of-control spending on prescriptions drugs and the soaring cost of health insurance administration continue to be the two major drivers behind rising healthcare costs.”

Healthcare spending grew to $3.3 trillion in this year.

 

1. Prescription drug spending increased by 9.2% from the previous year. Part of that increase was the introduction of new drugs.

The Obama administration ignores the fact that more people are becoming sick because of an increase in obesity, diabetes and hypertension. These people now have to take medicine, see doctors, and buy medical devices.

2. Administration services costs and net costs of health insurance (after paying medical bills) have increased 9.4% from a year ago.

These costs included government bureaucratic costs, insurance bureaucratic costs, out of pocket expenses and insurance premium costs.

How much waste is in all these administrative services costs.

3. Hospital spending rose 6.1% from a year ago. Hospital bureaucracy has been try how to decrease spending by decreasing waste and personal. However, bureaucracy and unnecessary administrators and outrageous hospital executive salaries continue to increase.

4. Physician and outpatient clinical expenditures rose 5.0%.

Physician investment in medical structures and equipment rose only 1.7%. Physicians are reluctant to make investments in a failing healthcare system.

Each category in the various graphs above reveals opportunities to decrease the cost of medical care.

It cannot be done by the government’s complete take over of healthcare.

The government is the problem as we have seen and still are seeing with the VA Healthcare system.

Socialism does not work. In leads to unintended consequences as consumers adjust to the rules and regulations of an attempt to manage society.

Consumers must demand rule changes and permit the market place to sort things out.

Repair of the healthcare system can only occur in a consumer driven healthcare system with consumers in control of their healthcare and their healthcare dollars.
The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone

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