I turned to a trusted source, McKinsey & Company, to understand how all the pieces fit together.
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The 17-slide Flash demonstration tries to explain why the US spends $650 billion more than expected (compared to peer-nations) even though our disease prevalence is lower than average.
I can remember when $650 billion was a lot of money.
Key points:
- Most (2/3) of the $650 billion is spent on outpatient care, which more than offsets increased utilization by improved cost-effectiveness over inpatient and long-term care.
- US health administration costs are 5 times higher than peer average.
- Our multi-state regulatory system creates inefficiencies and waste.
- Public spending (Medicare et al) accounts for almost 50% of total spending.
- Private spending only accounts for 13% of total spending.
- Private payer reimbursement grows when Medicare price growth slows.
How can private spending be expected to grow (think...
- larger co-pays,
- alternative medicine,
- cash-based physical therapy practices.)
...when comparable OOPs, like Japan, for instance, are in the 2-3% range?
The McKinsey report is sweet eye candy for the hardcore policy wonk but it's conclusion offers little that is new, different or hopeful for those of us with boots on the ground in the American health care trenches.
