Health Care Expenditures in the United States and Other Countries, Part 1

Flashcards covering key concepts, definitions, and trends related to health care expenditures in the United States and other countries, based on lecture notes from PUBPOL 2350.

Drivers of Mortality Reduction (1750-1850)

Improved nutrition and economic growth, early public health programs, and medical care.

Drivers of Mortality Reduction (1850-1950)

Public health programs (most cost-efficient), nutrition and economic growth, and medical care.

Drivers of Mortality Reduction (1950-Today)

Medical care (vaccinations, antibiotics, expensive 1-on-1 interventions), public health, and nutrition and economic growth.

Life Expectancy in Low vs. High-Income Countries

Low-income countries have experienced larger increases in life expectancy over the last 75 years compared to higher-income countries.

Medical Care's Contribution to Life Expectancy (U.S., 1950-2025)

Estimated to contribute 5 to 10 years to improved life expectancy when shifting from 'worst' to 'best' situation.

Social Determinants of Health

Factors like stress, weight, diet, exercise, drinking, genetics, drugs, smoking, and driving, which significantly impact life expectancy.

U.S. Spending on Social Determinants of Health

The U.S. spends relatively little addressing social determinants of health compared to other high-income countries.

Medicalization of Health

The increasing role of medicine in health improvements, particularly over the last 75 years.

U.S. Per Person Medical Spending (2023)

$14,600, representing 17.6% of GDP.

National Health Expenditures (NHE)

The total amount of all spending in the U.S. on medical care. In 2023, it was $4,867 billion ($4.9 trillion).

Gross Domestic Product (GDP)

The total value of all domestically produced goods and services; a measure of a country’s income or spending capacity.

U.S. Health Care Expenditure 2023 (as % of GDP)

17.6%.

Top Personal Consumption Expenditure Categories (2024)

Medical Care (21%), Housing and Utilities (18%), Food (14%).

NHE vs. Personal Health Care Consumption Expenditure

NHE exceeds personal health care consumption because NHE includes research spending, investments, and net exports.

Majority of Medical Spending (by Sector, 2023)

Hospital Care (37%) and Physician & Clinical Services (24%) account for the largest shares.

NHE Per Capita Growth Since 1950

National Health Expenditures per capita have consistently increased over time, adjusted for inflation.

Growth Rate in Health Spending Per Capita (Last Three Decades)

Has slowed down substantially compared to earlier decades (e.g., 1.8% from 2010-2023 vs. 4-6% in earlier periods).

Impact of Rising Medical Costs on Workers' Wages

Growing medical costs and health insurance premiums cut into workers' take-home pay, leading to substantial cumulative loss in earnings.

Persistence of Health Care Spending Increase

Health care spending has been increasing consistently and substantially decade after decade in the U.S. and in other countries.

Four Factors of Persistent U.S. Health Care Spending Growth

Technology/Innovation, Health Insurance expansion, Fee-for-service reimbursement, and limited Patient Cost Sharing.

Medical Technology

The goods and services (e.g., MRI tests, prescription drugs, surgical procedures) a patient receives for a health condition.

President Eisenhower's Heart Attack Treatment (1955)

Included EKG, prolonged bed rest, and medications like amyl nitrate, papaverine, and morphine.

Modern Heart Attack Treatment

Completely different, much more expensive, and more effective medical technology than in 1955.

Cost Sharing

Patients typically do not face the full price of medical care at the point of care due to insurance coverage.

Sources of Medical Spending (NHE), 2023

Private Insurance (36%), Medicare (25%), Medicaid (21%), Out of Pocket (12%), Other (6%).

Fee-for-service Reimbursement

A payment model where physicians and hospitals are paid more as they provide more services to a patient, rather than for producing health outcomes.

Causes of Growth in Per Capita Medical Spending (1970-2019)

Technology (38%), Income (37%), Insurance (11%), Aging (9%), Prices (8%).