The United States spent $4.1 trillion on health care in 2020, which is around $12,530 per person and 19.7% of the nation’s gross domestic product.
Despite the COVID-19 pandemic, this only reflects a 9.7% increase over 2019, which is around 4% higher than the average annual increase.
Medicare and Medicaid increased 3.5% and 9.2%, respectively, to a combined $1.5 trillion. Surprisingly, private health insurance decreased by 1.2% to $1.15 trillion, with out-of-pocket expenses declining 3.7% to $388.6 billion.
Hospital expenses increased 6.4% to $1.27 trillion, which was only slightly higher than the rate of increase in 2019.
These numbers have become so large that it is hard to get one’s head around then, and, unfortunately, they are expected to get even larger.
The Center for Medicare Services is projecting a 5.4% annual increase through 2028. By then, it is expected that the nation will be spending $6.2 trillion on health care every year.
With the rise of inflation and a continued nursing shortage, these numbers are probably optimistic at best. What is clear is that this is not sustainable.
The problem is twofold.
First, the age of the average citizen is getting older as people are living longer.
Since older patients have more health problems and a higher rate of chronic diseases, costs will inevitably go up. The best way to cut costs is to reduce the rate of chronic conditions among older patients.
Second, the U.S. health care system is woefully inefficient.
The U.S. spends twice as much on health care as France, Canada or the United Kingdom, but it has a lower life expectancy and a higher rate of chronic illness than any of these nations.
A central reason for out-of-control health care spending in the U.S. may be that we spend the bulk of our health care dollars on the treatment of disease and not on the prevention of disease.
In 2020, the nation only spent 5.4% of its health care dollars on public health and prevention. Even that miniscule amount is deceiving because prior to COVID-19 the U.S. only spent half that much.
Funding for public health and prevention programs helps the nation prepare for pandemics, prevent suicide, address obesity and provide diabetes education, to name only a few initiatives.
The funding for many of these programs has either not been able to keep up with inflation so their impact is lessened, or they the programs ended due to lack of funding.
For example, the Hospital Preparedness Program, which assists health care systems in being ready to respond to disasters, has seen its budget cut from $515 million in 2003 to $296 million in 2022.
In like manner, the Center of Disease Control and Prevention’s has seen similar cuts. The Prevention Fund, which was originally allocated $33 billion covering 2010-2027, has had resources reallocated.
In addition, the Public Health Emergency Preparedness and Response Program has seen its budget cut almost $300 million annually, leaving at-risk populations to fend for themselves.
Lack of funding is one reason the federal government had to prop up so many health systems in 2020 and 2021 during the peak of the COVID-19 pandemic.
Preparedness and prevention programs are cheaper than responding to an out-of-control pandemic or other disaster. The same is true with chronic diseases and mental health. Prevention is cheaper than treatment.
The Trust for America’s Health in its most recent public health funding report argues that decades of cuts to public health and preparedness left the country ill-prepared for the COVID-19 pandemic.
The reduction of funding over decades left the entire nation – and particularly at-risk communities – without sufficient resources or infrastructure to combat the virus or navigate lockdowns.
This forced the government to spend excess amounts through several rescue plans, which would have been greatly reduced if the nation had adequately funded preparedness programs. So, TFAH is calling for an investment of $4.5 billion in additional annual funding for public health infrastructure.
Many of the nation’s prevention programs have suffered the same fate as its preparedness initiatives.
Designed to reduce the rate of heart disease, respiratory disorders, hypertension, cancer and diabetes, they now lack sufficient funding to help at-risk communities. The result is more patients suffering from preventable chronic diseases and cancers, which translates into higher mortality rates and excess health care costs for everyone.
Insufficient investment in prevention and preparedness is one reason that minority groups have been among the people most impacted by COVID-19. The Centers for Disease Control and Prevention reports that Native Americans were 2.8 times more likely, and African Americans 2.2 times more likely to die of COVID-19 than whites.
Prevention programs are not like a one-time, short-term stimulus package. They must be adequately funded year after year to have a positive effect. Failure to do so leads to unnecessary deaths and to an increased burden upon Medicare and Medicaid, which ultimately increase health care costs for everyone.
We must rethink how we pay for health care since our system is both more costly and less efficient than other nations. And we must return to a prevention-focused approach by adequately funding our nation’s public health efforts.
The pandemic has revealed the crisis at the heart of the U.S. health care system, which we cannot afford to ignore any longer.
Senior Staff Chaplain and Clinical Ethicist at the Baptist Health Medical Center in Little Rock, Arkansas.
