Aiming at the Real Health Spending Drivers
October 20, 2020
New data from the Kaiser Family Foundation (KFF) dug deeper into some of the United States’ primary health expenditures by analyzing 2018 health spending per capita in the United States compared to economically similar countries. The research found inpatient and outpatient and services accounted for the largest share of U.S. health spending – totaling an average of $6,624 per person – while spending in other countries only added up to $2,718 per person. Compared to hospital spending, U.S. drug expenditures were lower, averaging $1,397 per person. Other countries averaged $884 per person on medications during the same time frame. KFF President and CEO Drew Altman’s recent column in Axios reported on the study, noting while drug costs get much of the time and attention in the public debate, it’s hospital spending that mostly explains the difference.
Why it Matters: Even if the United States adopted European drug prices, a popular policy measure among some lawmakers, total savings would only amount to around $500 per person. Real savings can be gained by tackling our enormous inpatient and outpatient expenses, where the difference in spending approaches $4,000 per person. While we need to adequately fund hospitals, especially as we take on the COVID-19 pandemic, the evidence is clear: hospital spending is a key area to address. Despite the political risk or “real pain” Altman noted in his reporting, stakeholders must not shy away from the task of eliminating wasteful spending and focusing on quality over volume.