The cost of health care in the United States is overwhelming. In 2013, total U.S. health care spending passed the United Kingdom as the world’s sixth largest economy. In 2017, U.S. health care spending became the world’s fifth largest economy at $3.6 trillion, just behind Germany, with the U.S. contributing $10,209 per person. That same year, Canada and Germany spent roughly $4,800 and $5,700 per person on health care. As a share of GDP, health care represents roughly 18 percent of the total U.S. economy.
These trillions of dollars have not necessarily been well spent. Compared to the U.S.’s fellow Organization for Economic Cooperation and Development (OECD) countries, our life expectancy is 2.5 percent lower and infant mortality rates, as well as years lost because of death, are each about 38 percent higher. And since 2000, suicide rates have risen 36 percent, whereas 83 percent of OECD countries have seen a decline.
Yet perceived health in the U.S. is 20 percent higher than the average. Perhaps that’s because Americans make three less annual doctor visits a year than other OECD countries and skip doctor consultations more frequently because of their costs.
All told, in terms of health outcomes, the U.S. is roughly equivalent to Poland, Hungary and Turkey.
The average share of health care in OECD countries is about 9 percent. If the U.S. limited its expense to 9 percent, its health care bill would be about $1.8 trillion. In lowering its share of GDP to OECD levels that would leave an extra $1.5 trillion per year looking for a home. Where could that $1.5 trillion go?
Improving America’s infrastructure is a popular though underfunded initiative. The American Society of Civil Engineers recently gave United States infrastructure a D-plus rating. According to estimates, our current infrastructure investment gap is $1.1 trillion through 2025, so the U.S. could cover that expense in one year with change to spare.
Montana’s infrastructure received a C rating. Given that Montana’s economy is about 0.2% of the U.S. GDP, our slice of $1.5 trillion would be about $3 billion. The Montana Department of Transportation estimates state roads and bridges require about $1.5 billion per year to maintain, leaving an additional $1.5 billion to make capital improvements.
Between 2006 and 2017, U.S. households filed over 12 million bankruptcies — nearly 22,000 in Montana. At an average cost of $100,000 per filing, that equals about $1.2 trillion per year in lost wealth and income — $2.2 billion in Montana. Medical bankruptcy accounts for roughly two-thirds of those bankruptcies. With consumer credit delinquency on the rise, we could put our $1.4 trillion to good use by reducing financial stress on American families already burdened by over $15 trillion in debt.
We could also improve our own health care system. Closing the health outcome with other OECD countries would be a good start. There are real issues surrounding rural-urban health inequality. According to the most recent data, if you live in an urban area in Montana, your life expectancy is a year longer. You have access to twice as many primary care physicians, 15% more osteopathic doctors and 75% more nurse practitioners. In urban areas, uninsured rates are 3% lower and the incidence of diabetes are 1% lower.
Issues surrounding how we provide health care will not be wished away. For health care reform to be successful all stakeholders should be part of the conversation with a single goal — to improve health outcomes. If the U.S. implemented something similar to Australia’s $4,500 per person Medicare model, which has yielded 5% longer life expectancy and 50% lower infant mortality rates, the U.S. health care dividend would be just under $1.5 trillion.
Robert Sonora is the associate director and director of health care research at the Bureau of Business and Economic Research at the University of Montana.