U.S. medical spending

The April issue of AARP Bulletin has an interesting chart (which unfortunately doesn’t seem to be available on line) breaking down healthcare spending in the United States in terms of where the money comes from and where it goes.

A large fraction of the total is paid for by government programs. Medicare, Medicaid, the Veteran’s Administration, military medical care, and public health programs account for nearly 45 percent of the total. Most of that is federal, but states contribute a significant fraction as well, especially on public health and their share of Medicaid.

Private health insurance companies pay for 33 percent of total healthcare spending, ultimately financed by premiums paid for by businesses, individuals, and government subsidies. Another 11 percent is paid for by patients and their families out of pocket. The remainder comes from a variety of other sources.

Almost a third of spending goes toward hospital care. Doctors and clinical services account for 20 percent and prescription drugs for 10 percent. Nursing home care is just 5 percent and home healthcare 3 percent. Dental services account for 4 percent. Medical equipment and supplies, research, and various other smaller categories collectively account for a little over a fourth of spending. Insurance overhead is 8 percent, which is a lot in dollar terms, but even if it were zero, that wouldn’t reduce total spending all that much.

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