The damage to the USA economy due to inflated health care costs is huge. A significant portion of the excessive costs are due to policies the government enacts (which only make sense if you believe the cash given to politicians by those seeking to retain the excessive costs structure in the USA the last few decades buy the votes of the political parties and the individual politicians).

In 2015, Humira (a drug from Abbvie to treat rheumatoid arthritis that is either the highest grossing drug in the world, or close to it) costs $2,669 on average in the USA; $822 in Switzerland; $1,362 in the United Kingdom. This is the cost of a 28 day supply.

All the prices shown here are for the prices reported are the average allowed costs, which include both member cost sharing and health plan payment. So it only includes costs for those covered by health plans (it doesn’t include even much larger price tags given those without insurance in the USA).

Harvoni (a drug from Gilead to treat hepatitis C is also near the top of drugs with the largest revenue worldwide). This is also a drug that has been used as a lightning rod for the whole area of overpriced drugs. One interesting thing is this is actually one that is not nearly as inflated in the USA over other countries nearly as much as most are. Again, for a 28 day supply the costs are $16,861 in Switzerland; $22,554 in the United Kingdom and $32,114 in the USA. Obviously quite a lot but “only” double the cost in the USA instead of over triple for Humira (from Switzerland to the USA).

Tecfidera is prescribed to treat relapsing multiple sclerosis. The cost for a 30 day supply vary from $663 in the United Kingdom to $5,089 in the USA ($1,855 Switzerland).

There are actually some drugs that are more expensive outside the USA (though it is rare). OxyContin is prescribed to treat severe ongoing pain and is also abused a great deal. The prices vary from $95 in Switzerland to $590 in the United Kingdom ($265 in United States).

The report also includes the cost of medical procedures. For both the drugs and the procedures they include not only average but measures to show how variable the pricing is. As you would expect (if you pay attention to the massive pricing variation in the USA system) the variation in the cost of medical procedures is wide. For an appendectomy in the USA the 25th percentile of cost was $9,322 and for the 95th was $33,250; the average USA cost was $15,930. The average cost in Switzerland was $6,040 and in the United Kingdom was $8,009.

As has been obvious for decades the USA needs to stop allowing those benefiting from the massively large excessive health care costs in the USA from buying the Democrats and Republicans support to keep prices so high. But there has been very little good movement on this front in decades.

Related: USA Heath Care System Needs Reform – USA Health Care Spending 2013: $2.9 trillion $9,255 per person and 17.4% of GDP – Decades Later The USA Health Care System is Still a Deadly Disease for Our Economy – USA Spends $7,960 per person Compared to Around $3,800 for Other Rich Countries on Health Care with No Better Health Results (2009) – Drug Prices in the USA (2005)

Now if you think you understand english you might think this is the maximum you have to pay out of your pocket. If you understand how horrible the USA health care system is and how nothing is easy, you probably suspect it isn’t a maximum at all. I find myself thinking that I don’t really understand what this seemingly simple value actually means, so I decided to research it and write this blog post.

First of all you have to pay the monthly premiums (assuming your employer doesn’t pay them for you), probably a few hundred or more dollars every month. Then the coverage likely has a deductible maximum for the year.

For this example, for 1 person the insurance costs $300/month with a yearly deductible maximum of $5,000. And the insurance plan says there is an out-of-pocket “maximum” of $6,500. Well 12 *$300 + $5,000 = $8,600. So, as you can probably guess, out-of-pocket “maximum” doesn’t actually mean the maximum out of your pocket. In fact the $8,600 is excluded from the out-of-pocket maximum calculation altogether.

So, you then might think ok, my actual out-of-pocket maximum (the most I will have to pay all year for health care) is $8,600 + $6,500 = $15,100. But that isn’t right either.

First, this is only for covered medical expenses, uncovered medical expenses are not included. This makes some sense, certainly, but in your planning, you can’t think your health care costs are capped at $15,100. Especially since in the USA lots of health care will be uncovered (dental care is often excluded, mental health care may well be limited, certain types of treatment may not be covered, prescription glasses, non-prescription drugs, addiction treatment…).

Remember, USA health care coverage isn’t even just limited by the type of care. For example, even if fixing your injured leg is covered, if you don’t do it using exactly the right places (where your health plan covers the cost), it may be considered to be uncovered care. In general, emergency care is more flexible for what is covered, but the horror stories of dealing with health insurers refusal to pay for provided health care adds risk to any health care someone gets in the USA.

Here is a good explanation of out-of-pocket cost questions (in this quote looking at out of network costs): “Out of Pocket Maximum” and health insurance plan terminology and calculation?

If some of the services were billed out-of-network, they may not apply to your in-network accums (deductible or OOP max). If you have out-of-network coverage, you may have separate accums that need to be met before benefits will be paid on services provided out of network. Additionally, even if you meet your deductible, you may be subject to balance billing by out-of-network providers, meaning that you’d pay any amount over what your insurer deems to be a reasonable charge for the services you received, in addition to your deductible and coinsurance, as the out-of-network services providers are not contractually obligated to write off any billed amount over the amount that your insurer deems to be reasonable. If you have no out-of-network coverage, you may be responsible for all charges.

Some of the services may not apply to the out-of-pocket-max accum at all, depending on the specifics of your plan. You will need to refer to your benefit booklet here to determine what services may or may not be included. If this is the case, you would continue to pay your coinsurance (20%, assuming they are in-network) on these services indefinitely and without limit.

Here is another good source, Out-of-pocket Maximums and ObamaCare

Before the ACA [Affordable Care Act] there was a lot more leeway for insurers to tweak how they treated out-of-pocket maximums. Even though things are a lot simpler now, depending on your plan not all services are going to be covered 100% and not all services are always going to count toward your out-of-pocket maximum.

While the ACA did improve the out-of-pocket “maximum” situation a great deal it is still far from simple. This post is just my attempt to figure out the basics of what that term actually meant. I, thankfully, have no medical expenses (other than physicals my only expenses in at least 15 years have been vaccinations for travel, vision exams and dental cleaning). So my need to understand the complex details of exactly how a plan deals with out of network care or high cost drugs is not high. But if it was I would do more research.

In looking into it as far as I did I found it fairly confusing and since the rules change frequently you have to be careful what sources you rely on. The government material seems very weak to me as does the insurer material (which seems written by lawyers to met the needs of lawyers but not the needs of most consumers to have understandable explanations).

Out of network coverage is not included in the “out-of-pocket” maximum, as far as I can tell. So for example if you have a 20% co-pay for some out of network health care and it costs $100,000 total you may be liable for $20,000 (even if you “maximum” is much less). Also I am sure, you risk having the whole $100,000 be considered uncovered and end up being liable for the entire cost.

Your coverage for health care outside the USA may well be $0. So you are responsible for everything. Basically, you are at risk if you travel and should have special health care coverage for international travel. Even the amount that is covered often has to be paid by you first and then you have to request reimbursement from your insurer. Countries with “universal” health care provide it to citizens, not to non-citizens – so you must pay health care costs you accrue while traveling yourself.

Medicare doesn’t even cover emergency health care needs outside the USA (and in some limited cases Mexico and Canada) and USA territories (Puerto Rico etc.).

And even getting health care coverage away from home in the USA is a huge hassle, if it is even possible (emergency care should be covered in the USA if you follow your health insurers procedures).

Related: The Growing Market for International Travel for Medical Care (often paying for overseas travel and the entire cost of health care yourself if cheaper, and with more customer friendly care, than using insurance within the USA, yes that is as lame as it seems) – Medical tourism (traveling overseas to get medical care) is growing – The Importance of Long Term Disability Insurance – Traveling for Health Care (2007) – Curious Cat Investing Glossary – Many Flexible Health Plans Come With A Costly Trap

While this remains bad news the rate at which heath care is increasingly costing those in the USA has been slower the last 5 years than it has been in past years. Basically the system is getting worse at a slower rate than we used to be, so while that isn’t great, it beats getting worse as quickly as we used to be. For the last 5 years the rate of increase has been between 3.6% and 4.1%.

GDP has increased more than inflation. As the GDP grows the economy has more production for society to split. The split between the extremely wealthy and the rest of society has become much more weighted to the extremely wealthy (they have taken most of the gains to the overall economy in the last 20 years). Health care has a similar track record of devouring the gains made by the economy. This has resulted in health care spending soaring over the decades in an absolute basis and as a percentage of GDP.

The slow down in how badly the health care system has performed in the USA has resulted in the share of GDP taken by the health care system finally stabilizing. Health care spending has remained near 17.4% since 2009. While hardly great news, this is much better news than we have had in the last 30 years from the USA health care system. The percentage of GDP taken by the USA health care system is double what other rich countries spend with no better health results.

It is similar to if a team started as a championship team and then got worse every year and now they have finally stopped getting even worse. Granted they have become the worst team in the league but if, say, their record has now been 5-55 for 3 years in a row, they at least are not winning fewer game in each subsequent year anymore. But you can hardly think you are doing a great job when you are clearly the worst team each and every year.

Obviously there is a need for much much more improvement in the USA health care system. Still stopping the growth in spending, as a percent of GDP, is a positive step toward drastically decreasing it to reach a level more in live with all other rich countries. Even this goal is only to have the USA reach a level of mediocrity. If you actually believe the USA can to better than mediocre that would imply a combination of drastic declines in spending (close to 50%) and drastic gains in outcomes. Decreasing spending by 50% would put the USA at essentially the definition of mediocre – middling result with average spending.

Health Spending by Type of Service or Product

• Hospital Care: Hospital spending increased 4.3% to $936.9 billion in 2013 compared to 5.7% growth in 2012. The lower growth in 2013 was influenced by growth in both prices and non-price factors (which include the use and intensity of services).
• Physician and Clinical Services: Spending on physician and clinical services increased 3.8% in 2013 to $586.7 billion, from 4.5% growth in 2012. Slower price growth in 2013 was the main cause of the slowdown, as prices grew less than 0.1%, due in part to the sequester and a zero-percent payment update.
• Other Professional Services: Spending for other professional services reached $80.2 billion in 2013, and increased 4.5%, slower than the 5.0% growth in 2012. Spending in this category includes establishments of independent health practitioners (except physicians and dentists) that primarily provide services such as physical therapy, optometry, podiatry, or chiropractic medicine.
• Dental Services: Spending for dental services increased 0.9% in 2013 to $111.0 billion, compared to 2012 when growth was 2.2%. Out-of-pocket spending for dental services accounted for 42% of all dental spending while private health insurance accounted for 47% (I am not sure how the remaining 11% was paid – medicare? VA? all government health care?)
• Other Health, Residential, and Personal Care Services spending grew 5.8% in 2013 to $148.2 billion, the same rate of growth as
  in 2012. This category includes expenditures for medical services that are generally delivered by providers in non-traditional settings such as schools, community centers, and the workplace; as well as by ambulance providers and residential mental health and substance abuse facilities.
• Home Health Care: Spending growth for freestanding home health care agencies decelerated in 2013, increasing 3.4% to $79.8 billion following growth of 4.5% in 2012. Medicare and Medicaid spending accounted for approximately 80 percent of total home health care spending in 2013.
• Nursing Care Facilities and Continuing Care Retirement Communities: Spending for freestanding nursing care facilities and continuing care retirement communities increased 2.4% in 2013 to $155.8 billion, up from growth of 2.0% in 2012. The faster growth in 2013 was primarily due to an increase in Medicare spending after a one-time downward rate adjustment for skilled nursing facilities in 2012.
• Prescription Drugs: Retail prescription drug spending grew 2.5% to $271.1 billion, compared to 0.5% growth in 2012. Faster growth in 2013 resulted from price increases for brand-name and specialty drugs, increased spending on new medicines, and increased utilization. I believe this is classified as retail to exclude all the costs for prescription drugs used in hospitals, nursing homes, etc. that is counted elsewhere.
• Durable Medical Equipment: Retail spending for durable medical equipment reached $43 billion in 2013, and increased 4.2%, slower than the 5.6% growth in 2012. Spending in this category includes items such as contact lenses, eyeglasses and hearing aids.
• Other Non-durable Medical Products: Retail spending for other non-durable medical products, such as over-the-counter medicines, medical instruments, and surgical dressings, grew 4.0% to $55.9 billion in 2013. This was a faster rate of growth than in 2012, when spending grew 1.8%.

Health Spending by Major Sources of Funds:

• Medicare: Medicare spending, which represented 20% of national health spending in 2013, grew 3.4% to $585.7 billion, a slowdown from growth of 4.0% in 2012. This slowdown was attributed largely to slower enrollment growth and impacts of the Affordable Care Act (ACA) and sequestration.
• Medicaid: Total Medicaid spending (15% of national health spending) grew 6.1% in 2013 to $449.4 billion, an acceleration from 4.0 percent growth in 2012. Federal Medicaid expenditures increased 6.2% in 2013, while state and local Medicaid expenditures grew 5.9%.
• Private Health Insurance: Overall, premiums reached $961.7 billion in 2013 (representing a 33% share of national health spending), and increased 2.8%, compared to 4.0% in 2012. The net cost ratio for private health insurance—the difference between premiums and benefits as a share of premiums—was 12.0% in 2013, the same as in 2012. Private health insurance enrollment increased 0.7% to 189.3 million in 2013, but was still 8.2 million lower than in 2007.
• Out-of-Pocket spending, which accounted for 12% of national health spending, grew 3.2% in 2013 to $339.4 billion, a deceleration from growth of 3.6% in 2012.

I am not sure what the other 20% is. I believe non-profit foundations are a portion, maybe the whole 20% (though I doubt it). Maybe government health care, VA, active duty military health care spending?

Health Spending by Type of Sponsor*

• In 2013, households accounted for the largest share of spending (28%), followed by the federal government (26%), private businesses (21%), and state and local governments (17%). My guess is charities and foundations make up the remaining 8% (though I may be wrong).
• Household health spending grew 2.8% in 2013—a slower rate of growth than the 4.8% rate in 2012—due in part to the low rate of increase in employee contributions to private health insurance premiums. Despite the slower growth in 2013, the household share of health spending has remained steady at 28% since 2010.
• Federal government spending for health care increased 3.5% in 2013 after declining 0.2% in 2012. Faster growth was influenced in part by an increase in Medicaid payments to primary care physicians mandated by the ACA. The Federal government share of health spending has decreased in recent years, from 27% in 2011 to 26% in both 2012 and 2013, primarily due to the expiration in June 2011 of enhanced federal matching rates for Medicaid mandated by the American Recovery and Reinvestment Act of 2009.
• State and local government spending increased 3.2% in 2013. This increase followed strong growth of 6.3% in 2012 and 9.3% in 2011 that was also due largely to the expiration of enhanced federal Medicaid matching rates for states. During the period 2010 – 2013, the share of health spending financed by state and local governments increased from 16% to 17%.
• Health care spending financed by private businesses increased 4.0% in 2013, much higher than the average increase of 0.7% during 2008–10 caused by recession-related job losses and declines in private health insurance enrollment during and just after the recession. The private business share of overall health spending has remained fairly steady since 2009, at about 21%.

The data in this post is provided by the US Department of Health and Human Services. I provide a direct link to the data, in my experience USA government sites break direct links fairly quickly unfortunately, in the last few years they have often just made the links to the current data, which is better than it used to be, but still is lame. They should provide permanent urls …/[year]/[report]/[specific_details] for example… if, as in this case they have maybe 10 separate document on this one report.

* Type of sponsor is defined as the entity that is ultimately responsible for financing the health care bill, such as private businesses, households, and governments. These sponsors pay health insurance premiums and out-of-pocket costs, or finance health care through dedicated taxes and/or general revenues.

The USA health care system was deemed a deadly disease by W. Edwards Deming decades ago and it has only been doing increasing damage the USA economy and society. We need to take much more effective steps to improve the system. The problems are very challenging especially because the system problems are largely created by bought and paid for political parties who have for decades allowed the health care system to damage the economy and society.

We have been making improvements in many areas within the system, but huge systemic problems have existed for decades and are being supported by those we continue to allow to serve as our elected officials. We can likely improve to being somewhat less than mediocre without fixing that problem.

We are unlikely to even be able to reach mediocre without the political parties changing their support for the entrenched interests that have retained such a poor system for so long (or us getting new political parties which doesn’t seem so likely and even if we did they would then have to also take a better approach on health care, which seems like, but isn’t necessarily certain). Since it is impossible to find a rich country with a health care system that has noticeably worse results and it isn’t possible to find any rich country that spends more than 35% less than we do, it is hard to imagine anyone supporting a worse health care system than the current one in the USA, but I suppose it is possible.

The direct accounting costs of the USA system are horrible, and those are just the direct accounting costs – it ignores 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…

To some extent the “Affordable Care Act” addresses some of the issues with tying health care to the employer (as the USA has done) and issues with pre-existing conditions. Those are both tremendous improvements. But the ACA leaves completely (essentially) unaddressed the systemic failure that result in the USA paying twice what other rich countries do for no better results. The ACA has some minor tweaks to try and reduce how costly the USA health care system is, but those are incredibly minor and don’t amount to even 5% of the change needed in that area just to get the USA to extremely costly compared to other rich countries (say lowering our expenses so we are only 50% more expensive than all the other rich countries instead of 100%).

And even just the relatively minor improvements the ACA made have, and continue to, drawn huge response from those who have successfully blocked improvement of the USA health care system for the last few decades. I don’t object at all, in fact I encourage, debate to improve how we implement improvement to the broken USA health care system. Continuing the last few decades of obstructionism however is not something I support, in fact it is something I find incredibly objectionable.

There are very challenging issues address to have a great health care system. Given how poorly we have done in the USA for decades there are some not that challenging improvements to make. We have given those supporting the current system decades to just do a poor job compared to every other rich country and they have failed. They don’t even have very stiff competition. Singapore is doing some good stuff, but people can object that they are small (Japan also does some good things, so do a few countries in Europe). Still it seems like we could learn a great deal from them. But overall rich countries don’t do very well, and yet compared to these poor performances the USA stands out as extremely poor in comparison to them (how you spend twice as much and still do no better is amazing). And that this goes on for decades and the special interests have prevent reform is incredible.

Sure investment bankers have done well turning the government into serving their interests at the expense of the country but it is hard to say they have done nearly as much as the health care system. Given that we are pretty easily spending $1 trillion a year (maybe $1.5 trillion) due to how bad our health care system is (compared to other rich countries) means we are willing to continue to support a system costing us in excess of $1 trillion a year. I don’t think investment banks are able to siphon that much out of the economy through their directing Fed, SEC and Treasury department policy.

The cost to continue to support such a costly and poorly run USA health care system is becoming an increasingly dire issue as we have the population in the USA age. Health care spending for those over 50 increases drastically. And the economic benefit people provide decreases drastically after retirement (for most people 60 to 70 years of age). We face a huge problem if we don’t at least improve for spending 100% more than other rich countries to spending say 60% more. Even that will be a huge drain on our economy but the USA has so much wealth we likely could support that much waste (likely that cost will be over $1 trillion a year, if we don’t make those modest improvement costs will likely be over $2 trillion a year). Those costs just mean we have $1 or $2 trillion less to spend on other areas (education, new cars, police, smart watches, coffee, air travel, military…). As you can imagine it takes quite a lot of reduction in those areas to get to $1 trillion, getting to $2 trillion is very hard to imagine.

Related: USA Health Expenditures Reached $2.8 trillion in 2012: $8,915 per person and 17.2% of GDP – USA Spent a Record $2.7 Trillion, $8,680 per person, 17.9% of GDP on Health Care in 2011 – USA Spent $2.2 Trillion, 16.2% of GDP, on Health Care in 2007 – USA Spent $7,960 Compared to $3,800 for Other Rich Countries on Health Care in 2009 with No Better Health Results – USA Health Care Costs reach 15.3% of GDP – the highest percentage ever (2003)

The GDP is calculated was adjusted in 2013 and the data series going back in time was adjusted. These changes resulted in increasing historical GDP values and making the portion of GDP for health care to decline (for example in 2011 using the old calculation health care was 17.9% of GDP and now 2011 is shown as health care spending representing 17.3% of GDP).

While health care spending increased faster than inflation yet again, the economy actually grew at a higher rate than health care spending grew. That the spending on health care actually declined as a percentage of GDP is good news; and it may even be that this hasn’t happened for decades (I am not sure but I think that might be the case).

Still health care spending growing above the rate of inflation is bad news and something that has to change. We have to start addressing the massive excessive costs for health care in the USA versus the rest of the world. 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…

Health Spending by Type of Service or Product: Personal Health Care

• Hospital Care: Hospital spending increased 4.9% to $882 billion in 2012.
• Physician and Clinical Services: Spending on physician and clinical services increased 4.6% in 2012 to $565 billion.
• Other Professional Services: Spending for other professional services reached $76 billion in 2012, increasing 4.5%. Spending in this category includes establishments of independent health practitioners (except physicians and dentists) that primarily provide services such as physical therapy, optometry, podiatry, and chiropractic medicine.
• Dental Services: Spending for dental services increased 3.0% in 2012 to $111 billion. Out-of-pocket spending for dental services (which accounted for 42% of all dental spending) increased 3.9% in 2012.
• Other Health, Residential, and Personal Care Services: Spending for other health, residential, and personal care services grew 4.5% in 2012 to $138 billion. This category includes expenditures for medical services that are generally delivered by providers in non-traditional settings such as schools, community centers, the workplace, ambulance providers, and residential mental health and substance abuse facilities.
• Home Health Care: Spending growth for freestanding home health care agencies accelerated in 2012, increasing 5.1% to $78 billion. Medicare and Medicaid spending accounted for approximately 81% of total home health care spending in 2012.
• Nursing Care Facilities and Continuing Care Retirement Communities: Spending for freestanding nursing care facilities and continuing care retirement communities increased 1.6% in 2012 to $152 billion.
• Prescription Drugs: Retail prescription drug spending slowed in 2012, growing 0.4% to $263 billion. The low growth in 2012 was driven largely by a slowdown in overall prices paid for retail prescription drugs, as numerous blockbuster drugs lost patent protection in late 2011 and 2012, and generic versions of those drugs became available.
• Durable Medical Equipment: Retail spending for durable medical equipment reached $41 billion in 2012, and increased 5.6 percent in 2012, the same rate of growth as in 2011. Spending in this category includes items such as contact lenses, eyeglasses and hearing aids.
• Other Non-durable Medical Products: Retail spending for other non-durable medical products, such as over-the-counter medicines, medical instruments, and surgical dressings grew 1.8% to $54 billion in 2012.

Health Spending by Major Sources of Funds:
• Medicare: Medicare spending, which represented 20% of national health spending in 2012, grew 4.8% to $573 billion.
• Medicaid: Total Medicaid spending grew 3.3% in 2012 to $421 billion. The relatively low annual rates of growth in Medicaid spending in 2011 and 2012 can be explained in part by slower enrollment growth tied to improved economic conditions and efforts by states to control health care costs. Federal Medicaid expenditures decreased 4.2% in 2012, while state and local Medicaid expenditures grew 15.0% – a result of the expiration of enhanced federal aid to states in the middle of 2011.
• Private Health Insurance: Overall, premiums reached $917 billion in 2012, an increase of 3.2%. The net cost ratio for private health insurance, the difference between premiums and benefits as a share of premiums, was 12.0% in 2012 compared with 12.4% in 2011. Private health insurance enrollment increased 0.4% to 188.0 million in 2012, but still 9.4 million lower than in 2007.
• Out-of-Pocket: Out-of-pocket spending grew 3.8% in 2012 to $328 billion.

Health Spending by Type of Sponsor*:
• In 2012, households accounted for the largest share of spending (28%), followed by the federal government (26%), private businesses (21%), and state and local governments (18%).
• The federal government financed 26% of total health spending in 2012, a slight decrease from 27% in 2011. The reduction in the federal share reflects the expiration in June 2011 of enhanced federal funding from the American Recovery and Reinvestment Act of 2009.
• The share of the health care bill financed by state and local governments increased from 17% in 2011 to 18% in 2012. This increased share of spending was due to states no longer receiving additional aid from the federal government in the form of enhanced matching rates.
• The remaining sponsors of health care maintained constant shares between 2011 and 2012 — households (28%), private businesses (21%), and other private revenues (7%).

The data in this post is provided by the US Department of Health and Human Services (they seem to remove the data each year – or at least I can’t find urls that continue to work – so direct link doesn’t work anymore).

* Type of sponsor is defined as the entity that is ultimately responsible for financing the health care bill, such as a private business, household, or government. These sponsors pay insurance premiums, out-of- pocket costs, or finance health care through dedicated taxes or general revenues.

While it is good news that the health care spending grew less than GDP did in 2012, it is a big problem that spending has grown from $8,086 per person in 2009 to $8,915 in 2012. Costs need to decrease, not just increase a fraction less than GDP. And they need to decrease for years to reduce the problem from the current catastrophic state to just bad for the economy and thus all of us.

Related: USA Spent a Record $2.7 Trillion, $8,680 per person, 17.9% of GDP on Health Care in 2011 – Health Care in the USA Cost 17.9% of GDP, $2.6 Trillion, $8,402 per person in 2010 – USA Spends Record $2.5 Trillion, $8,086 per person 17.6% of GDP on Health Care in 2009 – USA Spent $7,960 Compared to $3,800 for Other Rich Countries on Health Care in 2009 with No Better Health Results

Medical tourism is on of the most attractive economic growth areas. However the competition is fairly high as the attractiveness of building such an industry is well known. Countries that have very good potential are: Thailand, Mexico, Malaysia, Singapore (for high end solutions), Costa Rica, India, Philippines and Panama. India has some great advantages but they have a deeply ingrained and extremely unhelpful bureaucracy. It seems to me that that creates a burden that likely means India can’t complete with the others effectively.

Even for the simplest aspect – visas for those seeking to bring income into the country as medical tourists I don’t have confidence India can do well.

Cayman to Singapore Gain as Rules Stump Clinics: Corporate India

India continues to be held back economically (across the entire economy not just in health care) by ineffective and burdensome regulation and government inefficiency.

The USA actually has a portion of the medical tourism market – those that have no concern about price (royalty, trust fund babies, movie stars etc.). Those with any concern about price can find the same level of care in Singapore, Japan, France, etc. at a fraction of the price.

I believe 2 or 3 countries in South East Asia will do very well with international medical care. The extent to which Thailand, Philippines, Singapore and Malaysia (and potentially others) do in this field could greatly impact their economic success. There is a great potential for Singapore and Malaysia to cooperate in this area (in Malaysia’s Iskandar region, which borders Singapore).

Related: Traveling To Avoid USA Health Care Costs –
Traveling for Health Care (2007) – Leading Countries for Economic Freedom: Hong Kong, Singapore, New Zealand…

It seems to me more gradual retirement makes a huge amount of sense (for society, individuals and our economy). That model is available to people, for example those that can work as consultants (and some others) but we would benefit from more options.

Why do we have to start work at 22 (or 18 or 26 or whenever) and then work 40 or so straight years and then retire? Why not gap years (or sabbaticals)? Also why can’t we just go part time if we want.

The broken health care system in the USA really causes problems with options (being so tightly tied to full time work). But I have convinced employers to let me go part-time (while working in orgs that essentially have 0 part time workers). And I am now basically on gap year(s)/sabbatical now. It can be done, but it certainly isn’t encouraged. You have to go against the flow and if you worry about being a conventional hire you may be nervous.

Related: Working Less: Better Lives and Less Unemployment – Why don’t we take five years out of retirement and spread them throughout your working life? – Retiring Overseas is an Appealing Option for Some Retirees – Living in Malaysia as an Expat – 67 Is The New 55

• USA health care expenditures grew 3.9% to $2.7 trillion in 2011, or $8,680 per person, and accounted for 17.9% of Gross Domestic Product (GDP).
• Medicare spending grew 6.2% to $554.3 billion in 2011, to 21% of total health care spending.
• Medicaid spending grew 2.5% to $407.7 billion in 2011, or 15% of total health care spending.
• Private health insurance spending grew 3.8% to $896.3 billion in 2011, or 33 percent of total health care expenditures.
• Out of pocket spending grew 2.8% to $307.7 billion in 2011, or 11 percent of total health care spending.
• Hospital expenditures grew 4.3% to $850.6 billion in 2011.
• Physician and clinical services expenditures grew 4.3% to $541.4 billion in 2011.
• Prescription drug spending increased 2.9% to $263.0 billion in 2011.
• Per person personal health care spending for the 65 and older population was $14,797 in 2004, 5.6 times higher than spending per child ($2,650) and 3.3 times spending per working-age person ($4,511).

Individuals (28%) and the federal government (28%) accounted for the largest share of those paying for health care in the USA. Businesses pay 21% of the costs of health care while state and local governments pay 17%.

The United States Centers for Medicare & Medicaid Services (CMS) project that health care spending will rise to 19.6% of GDP by 2021. Since the long term failure of the USA health care system has resulted in costs increasing faster than inflation every year for decades, it seems reasonable to expect that trend to continue. The burden on the USA grows more and more harmful to the USA each year these rising costs continue.

In 2004, the elderly (65 years old and older) accounted for 12% of the population, and accounted for 34% of spending.

Data from US CMS (sadly the way they provide the data online my guess is this url will fail to work in a year, as they post the updated data – I don’t see a way to provide a link to a url with persistent data).

Half of the population spends little or nothing on health care, while 5% of the population spends almost half of the total amount (The High Concentration of U.S. Health Care Expenditures: Research in Action).

Related: USA Spends Record $2.5 Trillion, $8,086 per person 17.6% of GDP on Health Care in 2009 – USA Spent $2.2 Trillion, 16.2% of GDP, on Health Care in 2007 – USA Health Care Costs reach 15.3% of GDP – the highest percentage ever (2005) – Systemic Health Care Failure: Small Business Coverage

Between 2006 and 2010 USA health care expenditures increased by 19%. Government spending accounted for 40% of costs (remember that figure is lowered due to Deloitte’s including inputed value for care of relatives). Those 65 and older account for 61% of the inputed cost care that is provided.

Seniors and baby boomers account for 64% of health care costs, but comprise only 40% of the USA population. The imputed cost of supervisory care and hospital care are far higher proportions of health care expenditures of seniors (65 and older).

I find this imputed value largely not worth considering. There are problems with the way we count GDP and economic activity (that affect health care and lots of other things). It is fine to be aware that they think $492 billion of extra care is given by family members but using that figure in any sensible way (other than saying hey there is a huge cost in people’s time to dealing with our health care system and sick people that isn’t counted in economic data) is questionable.

It is useful in looking at the increasingly old population we will see in the future and judging their is a large need for supervisory care that is not captured in just looking at the costs included in economic data currently. Not only will our grandkids have to pay for our living beyond our means today they will have to do so while providing unpaid care to their parents and grandparents.

The burden of long term supervisor care (that which can be provided by a non-health care professional) is one reason a resurgence in multi-generation housing options make sense to me. There are other good reasons also (child care, socialization, financial support to the young…). There are some real advantages and real disadvantages to such options. But I think economic advantages are going to encourage more of this going forward.

Related: Personal Finance Basics: Long-term Care Insurance – Health Care in the USA Cost 17.9% of GDP, $2.6 Trillion, $8,402 per person in 2010 – Resources for Improving Health Care System Performance

I do think there is merit to reducing yearly hours worked in the USA. The problem is this is all within a larger system. The USA’s broken health care system makes it extremely expensive to hire workers. One way to deal with the health care system failure is maximizing hours worked to spread out the massively expensive USA health care costs.

Also the USA standard of living is partially based on long hours (it is but one factor). We also have to work quite a few hours (about 5% of the total hours) to just bring us equal with other rich countries, in order to pay for our broken health care system.

Still reducing our purchases by cutting out some fancy coffee, a few pairs or shoes, a few cable channels (or all of them), text messages from overcharging phone companies… in order to have a couple more weeks of vacation would be a great tradeoff in my opinion. And one I have made with my career.

I have changed to part time in 2 of my full time jobs (to make my own sensible yearly hour model even if the bigger system can’t. Another time I bargained for more vacation time over more $. It isn’t easy to do though, most organizations are not willing to think and accommodate employees (hard to believe they respect people in this case, right?). The system is not setup to allow people to adjust total hours to maximize their well being.

Another option in the USA is to live within your means and then make your own sabbaticals during your career. Take a year off and travel the world, or hike the Appalachian Trail, or read trashy novels, or whatever you want.

Related: Medieval Peasants had More Vacation Time Than We Do – Dream More, Work Less – Vacation: Systems Thinking

Globally the rich countries citizens are not tremendously happy with health care systems overall. It seems likely not only does the USA cost twice and much as it should and perform poorly compared to countries doing an excellent job but the USA performs that poorly compared to countries that themselves have quite a bit of improvement to make. Which makes the state of the USA system even worse.

Data from the Commonwealth fund report published in 2011 with data for 2009, International Profiles of Health Care Systems, 2011:

Table showing, percent of GDP spent and total spending per capita in USD on health care by country.

Under currently law in the USA by 2020 the uninsured rate should decline to under 5% by 2020 (still far more than any rich country – nearly all of which are at 0%).

On many performance measures in the report the USA is the worst performing system (in addition to costing twice as much). Such as Avoidable Deaths, 2006–07, the USA had 96 per 100,000, the next highest was the UK at 83, Australia was the lowest at 57. And Diabetes Lower Extremity Amputation Rates per 100,000 population, the USA had 36 the next highest was New Zealand at 12, the lowest was the UK at 9. For experiencing a medical, medication or lab test rrror in past 2 years, the USA was at 18%, next worst was Canada at 17%, best was UK at 8%. The USA was top performer in breast cancer five-year survival rate, 2002–2007. And sometimes the USA was in the middle, able to get same/next day appointment when sick: the USA was at 57%, New Zealand achieved 78% while Canada only reached 45%.

It is possible to argue the USA provides mediocre results, which is consistent with most global health care performance measures. Unless you directly benefit from the current USA system it is hard to see how you can argue it is not the worst system of any rich country. Costing twice as much and achieving middling performance. All that doesn’t even factor in the cost in anguish and bankruptcies and restricting individual freedom (when you have to stay tied to a job you would rather leave, just because of health insurance) caused by the difficulty getting coverage and fighting with the insurance companies for payment and coverage for treatment expenses.

Related: Measuring the Health of Nations – USA Paying More for Health Care – Traveling for Health Care – resources for improvement health system performance