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Friday, Mar 29, 2024

Healthcare Costs Highlight Reasons for Reform in U.S.

The tab for healthcare in 2008 came to a whopping $2.34 trillion in the U.S. – an average of $7,681 per person, according to a report from the Centers for Medicare and Medicaid Services (CMS) published in the January issue of Health Affairs. The new report shows that healthcare spending still continues to outpace other sectors of the economy (it now accounts for over 16 percent of the nation’s economy) and is still that “runaway train” that federal and state legislators are so desperately trying to put the brakes on. The report also accentuates the challenges ahead for lawmakers and the reasons why so many want to overhaul the system. Although the report shows that healthcare spending in the U.S. decelerated to the lowest growth rate since 1960 slowing down from 6 percent in 2007 to 4.4 percent in 2008, the growth is still unsustainable in the long run. As a percentage of the gross domestic product, healthcare spending rose from 15.9 percent to 16.2 percent, according to the federal study. Jonathan Blum, a top official at CMS put it bluntly saying “Healthcare spending as a percentage of GDP is rising at an unsustainable rate. It is clear that we need health insurance reform now.” While healthcare spending reflected the downward pull of the economy, it didn’t slow down as much as the nation’s overall economic output as measured by the Gross Domestic Product, which only grew by 2.6 percent in 2008 (without factoring out inflation). The report also indicated Medicare spending grew 8.6 percent in 2008 to $469.2 billion compared to 7.1 percent growth in 2007. Total Medicaid spending grew 4.7 percent in 2008 to $344.3 billion. As lawmakers work to reconcile the House and Senate legislation into a final bill in the coming weeks, this report will likely support arguments in favor and against the proposed Healthcare Reform package, which has been heavily criticized by some Republicans as only making the problem worse, increasing the cost of healthcare and bending the curve the wrong way. If anything, it serves to illustrate how exorbitant healthcare spending is in the U.S. Another study published this December further puts it in perspective. The Organization for Economic and Co-operation and Development [OECD] released its “OECD Health Data 2009” report which compares health care trends among its 30 rich member countries. According to the report the U.S. ranks near the bottom in life expectancy among wealthy nations despite spending more than double per person on healthcare than the industrialized world’s average. No. 1 distinction On a per capita basis the U.S. spent the highest on healthcare with a total of $7,290 which is two-and-half times the OECD average of $2,984. At the same time, life expectancy at birth in the U.S. was 78.1 years in 2007, according to the Paris based organization, while the OECD average was of 79.1. In terms of life expectancy, the U.S. ranks just ahead of the Czech Republic, Poland and Mexico, where spending on health care is many times less per person and falls behind countries such as Japan, Switzerland, Canada and Australia. The U.S. far outspent the next biggest health care spenders, Norway and Switzerland, despite the fact that those countries’ life expectancies are two to four years longer, according to the study. While spending so much on healthcare, the report indicates the U.S. government’s share of the expenditure represents 45 percent and is less than any other OECD country. Private health Private health insurance represents 35 percent of total health care expenditures in the U.S., which is the highest among those countries surveyed by OECD. Additionally, there are fewer doctors per capita in the U.S. than most other OECD countries, infant mortality rates in the U.S. are higher than in most OECD countries and, based on 2006 statistics, the adult obesity rate in the U.S. is the highest among the OECD countries at 34.3 percent. The study shows that the United States stands out as performing very well in the area of cancer care, achieving higher rates of screening and survival from different types of cancer than most other developed countries. However, the report noted that the country does not do well in preventing costly hospital admissions for chronic conditions, such as asthma or complications from diabetes. Staff Reporter Andrea Alegria can be reached at (818) 316-3123 or at [email protected].

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