Tackling the Real Drivers of Health Spending

In recent years, we’ve seen a lot of finger-pointing at various health care sectors over which industry to fault for higher spending and costs. While there is enough blame to go around, new data from the Kaiser Family Foundation (KFF) digs deeper into some of the primary expenses by analyzing 2018 health spending per capita in the United States compared to economically similar countries. The researchers found that outpatient and inpatient services accounted for the largest share of U.S. spending – totaling an average of $6,624 per person – while spending in other countries only added up to $2,718 per person. Compared to hospital spending, U.S drug spending was lower, an average of $1,397 per person. Other countries averaged $884 per person on medications during the same timeframe.

This study underscores that even if the United States adopted European drug prices, total savings would only be around $500 per person, a small dent for a health system spending trillions per year. Real savings can be gained by tackling our enormous inpatient and outpatient expenses, where the difference in spending approaches $4,000 per person. As significant cost drivers, it’s an area that decision-makers and stakeholders should dig into more deeply and focus on solutions that compel the most cost savings.