US Healthcare Spending

Think of every dollar spent in the US economy in 2021. That’s all spending by consumers, companies and government. Now consider that 18.3% of those dollars went to healthcare.(1)

And we still have close to 10% of the US population without health insurance.

US government spending will continue to decline from the high levels of the Covid emergency. However, that will simply shift spending between line items of the Federal and household budgets. As the government ceases to pay for Covid vaccines, insurance and consumers will pick up that cost or go unvaccinated — as an increasing number are. As the expansion in Medicaid for the Covid emergency ends, a large number of consumers will lose Medicaid coverage. Some of these will pick up private insurance through the ACA while others may become uninsured.

It’s not a good situation.

Some rich conservatives blame the two Federal programs, Medicaid and Medicare, for excessive spending on healthcare. While there may be some truth to this, it’s a short-sighted argument. Reduced population size will decrease demand for products and disrupt stock markets, destroying private wealth. As noted in other posts, that may happen in the next few years, anyway.

Others plan the tax system and the extended patent protection given the developers of new drugs for driving the cost of medications through the roof. Certainly, Americans pay more for pharmaceuticals than do consumers in any other country. But that’s not the entire story.

Some now blame private equity investments in health care for rising prices.

The paradox is that the US considers spending on health insurance above 9.4% to be “unaffordable.” The percentage considered unaffordable in California for 2022 is 8.9%. However, as a nation, we are spending double that.

The system won’t be fixed with bandaids or patches. It will need a top-to-bottom replacement, probably through the creation of a National Health Service of some sort. This will dramatically end the opportunity for profiteering and fraud.

By the way, the latest investigation into medical profiteering involves Horizon Blue Cross and Blue Shield and overcharges to the State of New Jersey.(2) According to the report, for employees receiving care in New York facilities, Horizon was charging the state three times the actual cost of care.





  1. Agreed. The dilemma in the US is what you alluded to – the private investors. Adding to this the health system promoting the use of their products and we have a Healthcare Industrial Complex, using an old Eisenhower term for the military. This complex is resistant to change that is needed. Keith


    • Some of my insurance clients are immigrants who have subsequently brought parents to the US. Now the are starting to return to the old country for healthcare, and may start spending a majority of their time there. Couple with low fertility rates and viruses, we are going to see negative population growth fairly soon. That will be a game changer, not just for health care.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.