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McKinsey Report December 2011 Highlights

Accounting for the cost of U.S. health care: Pre-reform trends and the impact of the recession

The Affordable Care Act (ACA) was passed in March 2010.

The cost of health care has since become a focal point of related debates over government spending, entitlement reform, and ways to reduce the federal deficit,

The United States spends more on health care, both per capita and as a share of GDP, than any other country in the world. In 2009, spending on health care reached a record high $2.5 trillion, or 17.6 percent of U.S. GDP.

It also compares health care expenditures in the United States to those in other economically developed countries, accounting for differences in wealth.

A few notable findings include:

  • Health care spending reached record levels in 2009, both in absolute terms and as a share of GDP. Total spending exceeded expected levels—based on spending patterns in other developed countries and adjusting for wealth—by approximately $570 billion. This amounted to 23 percent of total spending on health care that year.
  • While health care spending has grown faster than the economy as a whole, growth rates have hit historical lows. Spending grew more slowly between 2008 and 2010 than at any other point since 1960.
  • The recession of 2008–2009 contributed to this slowdown, further reducing growth in utilization and spending. Where previous recessions have tended to have a delayed effect on spending, the effects of the recent economic downturn were more immediate.
  • Growth in health care spending has varied considerably across different categories of care, with the strongest growth in outpatient care and long-term and home care. Spending on inpatient care, pharmaceuticals, and health administration and insurance, meanwhile, slowed markedly between 2006 and 2009.

The full report can read at http://healthreform.mckinsey.com/Home/Insights/Latest_thinking/Accounting_for_the_cost_of_US_health_care.aspx.

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