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Healthcare spending near 20 percent of GDP, more than any other country

Price increases have been the biggest driver, with medical costs, prescription drug costs and physician and clinical services all playing a part.

Jeff Lagasse, Associate Editor

It has long been known that the U.S. spends more on healthcare than any other country, but a report from The Wall Street Journal highlights the extent to which this is true, showing healthcare spending will soon reach 20 percent of national GDP -- by far the highest among major economies.

Price increases have been the main culprit. Over the past 58 years or so, medical costs have risen about 2,000 percent, and the consumer price index has jumped about 700 percent. And since the turn of the century, the cost of prescription drugs has leapt 69 percent, physician and clinical services have gone up 23 percent, and hospital care has risen 60 percent.

Thanks to insurance and tax breaks, consumers tend to be protected from the bulk of these costs. Corporations are somewhat shielded as well. In 2017, they were able to deduct an estimated $854 billion from their taxes due to the health insurance they provide.

Despite this, consumers do indeed feel some of the impact. In the mid-1980s, healthcare comprised less than 5 percent of expenditures for Americans, on average. Today, that number is about 8 percent.

And after all that, the country isn't exactly getting the most bang for its healthcare buck. According to the report, the U.S. fares worse than other developed countries when it comes to things like life expectancy, heart disease, diabetes, respiratory disease and infant mortality.

Mergers and acquisitions also play their role, because as hospitals consolidate, they're able to demand higher prices from insurers. This is illustrated by MRI costs. In areas with at least four hospitals, market competition drives down MRI costs by about 23 percent compared to areas dominated by a single large hospital or health system.

The WSJ suggested that change will be difficult. Healthcare companies have doubled their lobbying spending over the past 20 years, making reform an uphill battle.

Twitter: @JELagasse
Email the writer: jeff.lagasse@himssmedia.com

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