By Ken Perez, Vice President of Health Policy and Government Affairs, Omnicell, Inc.
Discussions about the cost of health care in the United States often take the form of debates, pitting one sector against another. Classic examples are health insurers (payers) versus hospitals and health systems (providers), and pharmaceutical manufacturers versus providers. Often what is at stake in these clashes is the relative size of the health economic pie received by different sectors.
Looking at health care through a societal lens helps to avoid participating in these debates and instead focus on macroeconomic issues. For years, how much the United States spends on health care in total — across all payers and across all health care — has topped the list of macroeconomic issues.
National Health Expenditure (NHE) is the universally accepted measure of this. On March 28, the Centers for Medicare and Medicaid Services (CMS) released the 2021-2030 National Health Expenditure Report, which was prepared by the CMS Office of the Actuary.
How much did the United States spend on health care in total last year? In 2021, national health spending totaled $4.3 trillion, or 18.8% of the country’s gross domestic product (GDP) and down from a record high of 19.7% of GDP in 2020, which reflected significant expenses incurred to respond to COVID-19. Due to the pandemic, the NHE increased sharply (9.7%) from 2019 to 2020, and its growth slowed to 4.2% in 2021. Health expenditure per capita was $13,037 in 2021. For Putting that into perspective, last year the United States spent nearly $1,100. per month on health care for the average per person.
Comparisons with other countries
Given that health care consumes almost a fifth of the country’s GDP, one has to wonder if this is good or bad. One basis for answering this question is to compare US healthcare spending with that of equally advanced industrialized nations. Two measures are commonly used to make this comparison: 1) health expenditure as a percentage of GDP; and 2) health expenditure by capital.
Health expenditure as a percentage of GDP
Excluding 2020, the US NHE as a percentage of GDP for 2016-2019 and 2021 averaged 17.9%. According to Statista, the 10 industrialized countries most similar to the United States, including Germany, France and the United Kingdom, spent 10 to 12 percent of their GDP on health care during this period.
Health expenditure per capita
The Kaiser Family Foundation estimates that per capita health care spending in the United States was about $12,000 in 2020, about double the average for a group of 11 comparable industrialized countries (also including Germany, France and the United Kingdom). This ratio has been constant for several years.
Implications for health care in the United States
The perennial question is “Why does the United States spend so much more on health care than other countries?” While there are many reasons, including higher prescription drug costs and administrative expenses and greater use of medical imaging, the main underlying factor is rising labor costs. work. A landmark 2003 study by Gerard Anderson, Uwe Reinhardt et al. concluded: “It’s the prices, stupid.” Their study found that the United States spends significantly more on health care than other OECD countries due to the price of services charged by providers, and this primarily reflects the significantly higher salaries paid to doctors, nurses and other health care workers in the United States compared to other industrialized countries. And by causing the departure of hundreds of thousands of healthcare workers, the COVID-19 pandemic has exacerbated the labor shortage in the healthcare sector, which has driven up wage rates. According to the American Hospital Association, labor expenditure per patient increased by 19.1% from 2019 to 2021.
In addition, demographic trends point to a worsening health care workforce shortage over the next few years. The 2021-2030 National Health Expenditure Report predicted America’s continued aging, with the population age 65 and older growing at an average of 2.5% per year through 2030 and the population under age 65 increasing by only 0.2% per year on average over the same period.
These projections point to the continuation of a worrying trend: an aging workforce that is insufficiently replaced by younger generations, particularly in the health sector, which has seen the median age of nurses, nurse practitioners and pharmacists, to name a few, far exceed the median age of the general population.
With wage increases in response to labor shortages, control of labor costs can only be achieved by reducing the amount of labor required to provide health care . This could be accomplished through the application of intelligent infrastructure – including automation, robotics and data intelligence – to eliminate the labor component of certain tasks or improve labor efficiency. -work, which could ultimately reduce the NHE.