The Size of The Health Care Market

The health care market is unlike all others. It’s not money we voluntarily want to spend, yet, it consumes somewhere around one-sixth of our GDP. The latest figures show total healthcare costs at somewhere around 3 trillion dollars. That’s $3,000,000,000.00. Or to put it in perspective, we spend more than five times as much on healthcare as we do on automobiles.

That’s real big bucks.  And there are a lot of companies and people looking to get some of it.  It’s been a free-for-all.  The Affordable Care Act started in the right direction but got bogged down in complexity and politics.

It’s not just doctors and hospitals, that’s less than half according to the AMA1.  Prescription drugs account for over 10% of healthcare spending, that’s 325 billion (with a “b”) in 2015.  2016 figures aren’t in yet, but indications were that growth was up more than 10% to $360+ billion.

Clinical and lab fees account for another 132 billion, or about 4%.  Nursing care and home health care added another 245 billion.

The Health Care Market Per Person

To put these big numbers in perspective, the U.S. population is a 309,350,000, so at 3 trillion total,  the total health care tab is more than $9700 per person per year or $38,828 per family of 4 per year.  That’s an average, hopefully, yours is a lot less, but it takes a lot of healthy people to offset the bills from a serious illness.

Try calling your local hospital and asking how much it will cost to get a hernia fixed, or deliver a baby.  Most won’t even try to answer.  A few hospitals, to their credit, will try, but it will be a large range and come with a bunch of disclaimers.  The truth is, even the hospitals don’t know.

They have a billing system that is so complex that I’m surprised that even their computers can remember it.  Each patient and each insurance company will be quoted a different rate.  And the poor patient who comes in without insurance will get hit with a “list price” bill that is 3 to 5 times higher than what others pay.

I dislike big government, but this is a case where only the government can bring order.  We need standardized rates and billing. The health care market needs open pricing and service lists.  And we need someone to control quality.

Hospital error is now the 3rd leading cause of death in the US.  That’s disgraceful!  Some 440,000 people a year die from preventable hospital errors. Only the government can take the lead on this.  A lot of people die in hospitals, but these are the preventable deaths.  In most cases, it would involve only simple changes in processes or procedures.

Electronic health records are a good first step.  Doctors hate them because it requires time to document everything properly.  Many feel that it cuts into their patient interaction time.  And some fear of leaving a paper trail.  Hey doctors, if you’re reading this, the days of guesswork medicine have long passed.  We expect all treatments to be done according to the best scientific standards.  And we expect full documentation of all exams and actions.  Readable and shareable records are an absolute necessity.

1. Figures are from The AMA 2015 Report.