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Shocking Health Care Expenditure Stats

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Tags Global EconomyHealthU.S. EconomyInterventionismPrices

12/03/2014

According to the World Bank, total expenditures for health care goods and services averages about 6-7% of GDP around the globe. There are about a dozen recognizable countries that spend more than 10% of GDP on health care, but far and away the biggest spender is the US with 17.9% and rising--more than 5% more than any other country and up from 13.5% just 15 years ago!

Health care expenditures as a % of GDP

The reason for this blotted and runaway spending is simple. American have too much health care insurance coverage, specifically comprehensive health insurance, and are therefore largely insulated from the true prices of heath care expenditures. The combination of public and private health insurance pay the vast majority of health care expenditures. In can be seen in World Bank data on out-of- pocket health care expenditures as a % of private expenditures on health care. The mean average for countries around the globe is over 80%, with a few recognizable countries like Germany and Canada around 50%, with the US coming in second last place at 20% and falling. A good bit of that 20% is co-pays and deductibles meaning that most Americans are not exposed to cash-free market prices. Obama Care's system of cross-subsidation will only make it worse, although the rationing schemes employed by national health systems and the VA would reduce costs, as it reduces services. 

Out-of-pocket health care expenditures as a % of private expenditures

The US health care system combines a series of monopolies on the supply side and a series of subsidies on the demand side: Truly a prescription for disaster. 

 

 

Mark Thornton is a Senior Fellow at the Mises Institute and the book review editor of the Quarterly Journal of Austrian Economics. He has authored seven books and is a frequent guest on national radio shows.

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