Healthcare Costs Highlight Reasons for Reform in U.S.

The tab for healthcare in 2008 came to a whopping $2.34 trillion in the U.S. – an average of $7,681 per person, according to a report from the Centers for Medicare and Medicaid Services (CMS) published in the January issue of Health Affairs.

The new report shows that healthcare spending still continues to outpace other sectors of the economy (it now accounts for over 16 percent of the nation’s economy) and is still that “runaway train” that federal and state legislators are so desperately trying to put the brakes on.

The report also accentuates the challenges ahead for lawmakers and the reasons why so many want to overhaul the system.

Although the report shows that healthcare spending in the U.S. decelerated to the lowest growth rate since 1960 slowing down from 6 percent in 2007 to 4.4 percent in 2008, the growth is still unsustainable in the long run.

As a percentage of the gross domestic product, healthcare spending rose from 15.9 percent to 16.2 percent, according to the federal study.

Jonathan Blum, a top official at CMS put it bluntly saying “Healthcare spending as a percentage of GDP is rising at an unsustainable rate. It is clear that we need health insurance reform now.”

While healthcare spending reflected the downward pull of the economy, it didn’t slow down as much as the nation’s overall economic output as measured by the Gross Domestic Product, which only grew by 2.6 percent in 2008 (without factoring out inflation).

The report also indicated Medicare spending grew 8.6 percent in 2008 to $469.2 billion compared to 7.1 percent growth in 2007. Total Medicaid spending grew 4.7 percent in 2008 to $344.3 billion.

As lawmakers work to reconcile the House and Senate legislation into a final bill in the coming weeks, this report will likely support arguments in favor and against the proposed Healthcare Reform package, which has been heavily criticized by some Republicans as only making the problem worse, increasing the cost of healthcare and bending the curve the wrong way.

If anything, it serves to illustrate how exorbitant healthcare spending is in the U.S.

Another study published this December further puts it in perspective.

The Organization for Economic and Co-operation and Development [OECD] released its “OECD Health Data 2009” report which compares health care trends among its 30 rich member countries.

According to the report the U.S. ranks near the bottom in life expectancy among wealthy nations despite spending more than double per person on healthcare than the industrialized world's average.