Health Spending Grew Slower in U.S. than in Other Developed Countries, 2007-2011 (but the Trend Won’t Last)

It is unlikely that Obamacare explains the slowing rate of growth in health spending. A new research paper by Luca Lorenzoni and colleagues, from the Organization for Economic Co-operation and Development, confirms not only that the slowdown occurred well before Obamacare, but that health spending has slowed more in the United States than in Canada, France, Germany , the Netherlands, and Switzerland.

The report shares some disturbing data:

• Government-health spending as a share of all U.S. health spending increased by 4.8 percentage points, from 44.0 percent (2000) to 48.8 percent (2011), whereas it shrank somewhat in Canada, France, and Germany;

• Despite the growth in consumer-driven health care, in the United States, the share of spending paid directly out-of-pocked dropped by 2.1 percentage points, from 14.2 percent (2003) to 12.1 percent (2011), whereas it increased somewhat in Canada and France;

• Health administration and health-insurance share of government-health spending increased by 1.2 percentage points, from 5.1 percent (2000) to 6.3 percent (2011), whereas it shrank in Canada, France, Netherlands, and Switzerland.

The report also gives us more insight into a more important question: Do we spend too much on health as a share of Gross Domestic Product (GDP) versus other countries? The answer remains “no.”

Table A shows that U.S. GDP per capital after spending on health care was $34,479 in 2000, higher than any other country. In 2011, it was $35,212, still higher than other countries. However, the change over the years is concerning. Other countries increased the amount of incomes not allocated to health care much faster than the United States did. Indeed, it appears that almost all U.S. GDP increase during those eleven years was chewed up by health care. Switzerland, where patients control one-quarter of their health spending directly (versus less than one-eighth in the U.S.) has managed to have economic growth without letting the healthcare sector devour too much of it.

2000 to 2011 was a period of significantly increased government control of U.S. health care. Needless to say, Obamacare has put that tendency into overdrive. We can expect the United States to deteriorate in measurements of international health spending in the years to come.