The nation's health care bill Who bears the burden? A chartbook

By Jerry Cromwell, Deborah Healy, Elizabeth Jennifer Seeley, Diana Trebino, Genevieve Cromwell

During the past 50 years, spending on health care services—by households, private businesses, and state and federal governments—increased dramatically and now approaches one out of every five dollars spent in the United States. The benefits of health care spending have not been distributed equally across the population, with less going to a growing number of uninsured people. Moreover, the United States does not realize proportional value for its spending on health care. It spends more per capita than any of six other industrialized countries but ranks below them on measures of health care quality, efficiency, and equity.

Unable to sustain rising contributions to health insurance, employers are shifting
more of the cost to workers, thereby increasing the number who cannot afford
coverage. Federal, state, and local governments have taken on some of these costs by subsidizing the health services of elderly, disabled, and poor people. Health spending, once a small fraction of the federal budget, now exceeds spending on defense or Social Security. State and local governments now devote more of their own taxes to health care than to elementary and secondary education, despite the federal government’s paying for the majority of Medicaid spending.

The data in this chartbook indicate that the financial burden of health care
spending presents a disproportionate burden on uninsured and sick people, small businesses, and low-wage workers. In addition to the magnitude and maldistribution of health spending, society’s “opportunity costs” are high: Private businesses, households, and state and federal governments could have made other highly productive purchases had health spending not exceeded economy-wide growth. For the government, health care spending decreases the money available for other investments, such as education, infrastructure, and debt reduction. As health costs increase and the population ages, the historical reallocation of US productive capacity to health care is unsustainable. With pressing needs elsewhere, the country must make the health system more efficient, equitable, and affordable.

Passage of the Patient Protection and Affordable Care Act (ACA) by Congress
in 2010 was a comprehensive step to contain health care costs, particularly for
families, while extending health care coverage to millions of uninsured people.
The potential benefits of the ACA include better access to health professionals and prescription drugs, decreased medical debt and fewer subsequent bankruptcy filings, and lower labor costs for small businesses. Constrained health care spending will allow businesses and government to make more cost-effective investments elsewhere without raising prices or burdening taxpayers. With this chartbook as a baseline, users can monitor changes that result from the ACA and take future steps to enhance the cost-effectiveness of the US health care system.

Bibliography

Cromwell, J., Healy, D., Seeley, E. J., Trebino, D., & Cromwell, G. (2013). The nation's health care bill: Who bears the burden? A chartbook. (RTI Press Publication No. BK-0010-1307). Research Triangle Park, NC: RTI Press. https://doi.org/10.3768/rtipress.2013.bk.0010.1307

© 2019 RTI International. This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

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Authors

Jerry Cromwell — Jerry Cromwell, PhD, has more than 35 years of experience conducting federally funded technical and evaluation projects in health economics. Major fields include Medicare hospital and physician payment systems and productivity gains, disease management evaluations, federal-state Medicaid public finance, physician participation in publicly funded health programs, reimbursement of anesthesia services, and disparities in access to complex health technologies. His technical expertise includes actuarial estimation of hospital inpatient and outpatient payment rates, quasi-experimental design of payment reform demonstrations, quantification of breadth and depth of state Medicaid insurance coverage and physician work effort, and econometric analysis of business cycle effects on Medicaid eligibility. He has sat on AHCPR, VA, and OTA health care study sections and testified before Congress on Medicare and Medicaid payment reforms. He is the founder and past president of Health Economics Research, which was acquired by RTI in 2002.

Deborah Healy — Deborah Healy, PhD, University of Chicago, is a senior economist specializing in antitrust and health care at Compass Lexecon in Chicago.

Elizabeth Jennifer Seeley — Elizabeth Seeley, PhD, London School of Economics, is a research consultant and lecturer at the Harvard School of Public Health with a concentration in pharmaceutical reimbursement policy.

Diana Trebino — Diana Trebino, MPH in health policy and management, Boston University, is an RTI research associate based in RTI’s Waltham, Massachusetts, office.

Genevieve Cromwell — Jerry Cromwell, PhD, has more than 35 years of experience conducting federally funded technical and evaluation projects in health economics. Major fields include Medicare hospital and physician payment systems and productivity gains, disease management evaluations, federal-state Medicaid public finance, physician participation in publicly funded health programs, reimbursement of anesthesia services, and disparities in access to complex health technologies. His technical expertise includes actuarial estimation of hospital inpatient and outpatient payment rates, quasi-experimental design of payment reform demonstrations, quantification of breadth and depth of state Medicaid insurance coverage and physician work effort, and econometric analysis of business cycle effects on Medicaid eligibility. He has sat on AHCPR, VA, and OTA health care study sections and testified before Congress on Medicare and Medicaid payment reforms. He is the founder and past president of Health Economics Research, which was acquired by RTI in 2002.

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