The U.S. Leads the World in Healthcare Spending. Does It Pay Off?

On a cold and rainy Wednesday morning, experts in the business of healthcare were busy predicting the forecast for healthcare costs in this country. Overall, things look gloomy.

The Center for Healthcare Management and Leadership at UT Dallas hosted a panel, “Can Payment Reform Control Healthcare Costs?” as part of its annual fall seminar series.  The panel consisted of Don Taylor, the Director of Southwestern Health Resources Integration, Dr. Forney Fleming, the Director of UT Dallas’ graduate Healthcare Leadership and Management program, and John McCracken, the Director of UT Dallas’ graduate Healthcare Management for Physicians program.

The panelists provided an overview of the history of healthcare in the country, beginning with the creation of medicaid and medicare in 1965. In 1970, healthcare spending per capita was a shocking $355. Today it is over $11,000 per person each year on in the U.S per capita.

“In simplistic terms, the cost of healthcare is not sustainable,” Fleming began. “What are the answers going to be? We don’t know yet.”

The panel discussed the skyrocketing healthcare costs over the past 50 years (Courtesy of: Dr. Forney Fleming)

Healthcare spending is outpacing inflation and GDP growth, leading to an unsustainable increase that will eventually come to a head, the panelists agreed.

Fleming continued to describe how the US compares to other developed nations in healthcare spending. As evidence of a system that isn’t working the way it is supposed to, he highlighted that the US spends nearly twice as much as most other developed countries per person annually, but rank below most of those countries in terms of health outcomes.

Courtesy of: Forney Fleming
Courtesy of: Forney Fleming

More spending is not resulting in higher outcomes internationally, and healthcare spending by state is not resulting in healthier citizens either. As Medicare spending goes up, the line of best fit actually shows that healthcare quality goes down. In 2001, Texas ranked second in total spending but third worst in terms of quality. Louisiana both spent the most and had the worst results.

Courtesy of: Forney Fleming

Stay tuned for another post on how payment reform might improve these somber statistics.