US Healthcare – Where does all the money go?

The Census Bureau recently released the results of its 2006 Services Industry Survey, which shed light in particular on where US healthcare dollars are spent:

Census Bureau Press Release: “Doctors and Dentists Account for 27 Percent of $1.6 Trillion in Health Care Revenue”

Full tabular data on US healthcare spending in 2006

The second link provides some detail on where US health care spending goes. It’s worthwhile to note that $117 Billion in Social Assistance is included, with line items like children’s daycare, community housing assistance, and other rolled into the overall Health Care and Social Assistance category. Without Social Assistance, health care spending is actually 1.45 trillion, or 11% of US GDP.

One line item in particular, Kidney dialysis centers, is worth a deeper look as it provides insight into the choices the nation has in the ongoing health care debate. Kidney dialysis centers account for 13 Billion in spending, and since dialysis expenditures are growing at 11-12% annually, dialysis will soon be 1% of the total health care budget. According to the AAKP (American Association of Kidney Patients), total dialysis spending is actually $18 Billion, and will rise to $28 Billion by 2010 (almost 2% of all health care spending).

As Medicare’s eligibility page declares, Medicare is available to all individuals with End Stage Renal Disease (kidney failure) who are in need of dialysis. For this (unfortunate) subgroup of Americans, universal health care is a reality, as Congress added those with ESRD to Medicare in 1971. Why does this group of patients receive treatment different from those afflicted with cancer or other life-threatening illnesses?

At one extreme, fiscal conservatives might argue (privately, at least) that the government has no business in health care, and Medicare/Medicaid should never have been created. On the other extreme, progressives argue that the US is the only industrialized nation without universal health care (strictly speaking, this is not true, as US hospitals are required to provide emergency care).

The problem of dialysis is interesting because it is a microcosm representing the issues the overall US health care system is facing. Should universal health care, or even limited assistance be extended to diabetics as a way to reduce the number of kidney failure patients? Should dialysis patients each be assigned a lifetime spending cap, as is done with private insurance, so that patients have to shoulder the burden beyond a certain point? Should Medicare provide dialysis funding only to those patients who are unable to pay themselves, or intentionally provide sub-market payments to ensure that patients with means will use their own funds to get better care? Should Medicare use a cost-benefit analysis to identify which ESRD treatment is most cost-effective, and incentivize that approach? The answers here, and the answers for all of US health care are likely not dissimilar.

3 thoughts on “US Healthcare – Where does all the money go?

  1. The fundamental problem with not providing hemodialysis services lifelong patients, no matter what the cost, is the alternative. Not providing a life sustaining service is different than discontinuing one. Withdrawing previously granted medical care by the government is a death sentence. It is true rationing. I am not opposed to it philosophically, but I do not think politicians in this country can stand up to family members demanding the continuance of services that keep a family member alive. Like the Terry Schiavo case.

  2. STATEMENT ABOVE READS: “progressives argue that the US is the only industrialized nation without universal health care (strictly speaking, this is not true, as US hospitals are required to provide emergency care).”

    ATTENTION!!!ATTENTION!!!!ATTENTION!!! WE ARE THE ONLY INDUSTRIALIZED NATION WITHOUT UNIVERSAL HC. JUST BECAUSE US HOSPITALS PROVIDE EMERGENCY CARE MEANS NOTHING…EVERYONE WHO LEAVES THE ER (WHETHER YOU R INSURED OR UNINSURED YOU STILL GET A BILL IN THE MAIL). US HOSPITALS CHARGE US FOR EVERYTHING ESP AN EMERGENCY…SOOO “STRICTLY SPEAKING” WE ARE THE ONLY FOOLISH COUNTRY THAT JUST DOESN’T GET IT…UNIVERSAL HEALTH IS WHERE ITS AT JUST STEP OUT OF THE US BOX AND YOU WILL SEE….

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