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Investing and Economics Blog

USA Spends Record $2.5 Trillion, $8,086 per person 17.6% of GDP on Health Care in 2009

U.S. health care spending increased yet again in 2009, increasing 4%. Total health expenditures reached $2.5 trillion, which translates to $8,086 per person or 17.6% of the nation’s Gross Domestic Product (GDP). This represents yet another record high percentage of GDP taken by health care – for decades, year after year, health care takes more and more of the economic resources of the country. The broken USA health care system costs twice as much as other rich countries for worse results. And those are just the direct accounting costs – not the costs of millions without preventative health care, sleepness nights worrying about caring for sick children without health coverage, millions of hours spent on completing forms to try and comply with the requirements of the health care system’s endless demand for paperwork, lives crippled by health care bankruptcies…

Medicare spending grew 7.9% in 2009 to $502.3 billion. The senior citizen and health care lobbies have continued to increase spending on medicare. Too bad they can’t work on improvement instead of increased spending. Spending for fee-for-service (FFS) Medicare accelerated in 2009, increasing 5.5%. Medicare Advantage (MA) spending increased 15.8% in 2009 following 21.4% growth in 2008 and was primarily attributable to a continuation of significant increases in MA enrollment. Total Part D spending (which includes spending for benefits, government administration, and the net cost of health insurance) increased 9.3% to $54.5 billion in 2009.

Medicaid (which is a line item for the cost of medical treatment for the un-insured, though far from the only cost): Total Medicaid spending grew 9.0% in 2009 to $373.9 billion was driven by a 7.4% increase in Medicaid enrollment. Federal Medicaid expenditures increased 22%, while state Medicaid expenditures declined 9.8%. This difference in growth is due to a significant increase in the Federal Medical Assistance Percentages (FMAP) used to determine federal Medicaid payments to states—a provision of the American Recovery and Reinvestment Act of 2009 (ARRA). Essentially the federal government funded the spending since the states were almost all out of money.

Private Health Insurance: Private health insurance premiums grew 1.3% in 2009 (actually a pretty great figure by itself – unfortunately one lone good piece of data is not enough). Benefit payment growth increased 2.8% in 2009. These trends were heavily influenced by the recession, which resulted in private health insurance enrollment declines (which reminds you why looking at 1 piece of data isn’t a good idea). In 2009, spending for benefits increased faster than premiums, and as a result, the net cost of private health insurance (or the difference between premiums and benefits) fell to an 11.1% share of total private health insurance spending.

The burden of the large costs of the health care system in the USA are financed by businesses (21%), households (28%), governments (44%), and other private sponsors [foundations, charities and the like] (7%).

Read the complete National Health Expenditure Data report.

Related: USA Spends Record $2.3 trillion ($7,681 Per Person) on Health Care in 2008 – USA Heath Care System Needs Reform – Resources to Help Improve the Health Care System – CEOs Want Health-Care Reform

January 31st, 2011 John Hunter | 6 Comments | Tags: economy, quote

Comments

6 Comments so far

  1. Financial Ramblings « Intelligent Speculator on February 12, 2011 3:05 pm

    Here are my top readings in the past week:… AOL-Huffington Post: Why the heavy breathing? @ TheBigPicture -The US is spending 17.6% of its GDP on health care @ Curious Cat -Why Egypt matters to you and your money @ 20smoney…

  2. Singapore’s Health Care System | Living in Singapore on April 13, 2011 8:57 am

    The Singapore Health Care system costs in Singapore costs less than 25% of that in the USA and results are better… Hip replacement costs US$43,00 in the USA and US$12,000 in Singapore. A heart bypass costs US$127,000 in the USA versus US$22,500 in Singapore.

  3. The USA Can’t Afford to Pay for the Current Health Care System at Curious Cat Investing and Economics Blog on April 15, 2011 1:38 pm

    The very frustrating aspect of the broken health care system in the USA is that it has been an enormous problem for decades. It isn’t that we have just discovered we have a fatally poor health care system in the last few years…

  4. Can We Expect the Health Care System in the USA to Become Less Damaging to the Economy? at Curious Cat Investing and Economics Blog on June 15, 2011 10:29 am

    […] have had over 20 years of health care costs going up more than inflation – every year. That is an amazing (and horrifyingly bad) record. We need very strong evidence […]

  5. Career Prospect for Engineers Continues to Look Positive | Product Sourcing - Industrial News on August 12, 2011 4:19 pm

    […] down in this regard. A significant reason for this is the USA can only fund so many things and a broken health care system, military complex, bailouts to bankers (trust fund babies and others) cost a lot of money. You […]

  6. USA Spent $2.6 Trillion, $8,402 per person,17.9% of GDP on Medical Expenses in 2010 » Curious Cat Management Improvement Blog on January 19, 2012 5:12 pm

    […] In 2009 the USA Spent Record $2.5 Trillion, $8,086 per person 17.6% of GDP on Medical Care. […]

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