Where do all those trillions of dollars for health care go?

Jeff Belle

By Jeff Belle

In the midst of so much political turmoil and economic uncertainty, there’s one thing that is for certain- Change! The Affordable Care Act of 2010 will bring about drastic changes to our health care, as we know it today. This article sheds light on the facts regarding basic health care cost and expenditures. It is necessary to get the facts straight about our current health care system and then dive into Obama Care. Unfortunately, the purview of this article doesn’t afford me the opportunity to discuss both issues at this time.

How much does the U.S. spend each year on health care? For 2010, the U.S. spent $ 2.59 trillion dollars. If you were to spend a million dollars per day, it would take approximately 5,000 years to spend what the U.S. spends yearly on health care. Wow! That’s a lot of money spent. In fact, health care grows faster than many other sectors of the economy. Today, health care cost is about 16% of Gross Domestic Product (GDP); however, by 2018 it will be about 20.3 percent of GDP. So, let’s look at a few facts about where and how health care dollars are being spent.

1. What percent of total health care costs go to prescription drugs? Fact: 10.1% or $ 259 trillion dollars

2. What percent of total costs go to hospital care? Fact: 31.1% or $ 814 billion dollars

3. What percent of total costs go to physician /clinical services? Fact: 21.4% or $ 516 billion dollars

Now that we have an idea as to where the money for health care goes, let’s see just who pays for it?

1. What percent of total health care costs does the Federal government pay? Fact: 27% or $ 699 billion dollars.

2. What percent of total health care costs does State and Local government pay? Fact: 16% or $414 billion dollars.

3. What percent of total health care costs do households pay? Fact: 28% or $ 719 billion dollars

4. What percent of total health care costs do private businesses pay? Fact: 21% or $ 544 billion dollars

Over the next few months, I will share the facts of The Affordable Care Act (Obama Care) with you. We will look ahead to what’s changing and when? How will Medicare and Medicaid be affected by Obama Care? This information will help you better understand The Affordable Care Act and how it fits into our health care system and affects your daily lives.

Sources:

Kaiser Commission on Medicaid and the Uninsured/Health Management Data, 2010.

McKinsey Global Institute, Accounting for the cost of U.S. health care, December 2008.

U.S. Dept of Health and Human Services, Center for Medicare and Medicaid Services, National Health Expenditure Projections 2008-2018, Feb. 2009.

Jeff Belle is a Senior Fellow in Health Policy, Institute for Public Policy and Leadership Development. Mr. Belle has a bachelor’s degree in political science, graduate work at Johns Hopkins and American Universities and completing a Master in Public Administration from Grand Canyon University. He is an advisory board member to Contra Costa County Emergency Medical Care Committee and lives in Antioch.

Antioch resident Jeff Belle is a graduate student and does extensive research and lectures in public policy and health care issues.

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