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Think About That...

• Total government spending on healthcare (including Medicare, Medicaid and other programs) has risen 7x from 1.2% of GDP in 1960 to 8.2% in 2009 while total government spending on education has risen only 0.6x from 4% of GDP in 1960 to 6% in 2009.

• Medicare and Medicaid, which did not exist in 1960, rose to 35% of total healthcare spending in 2009, while out-of-pocket spending declined to 12% of total healthcare spending in 2009 (or $894 per person per year*), down from 47% in 1960 (or $478 per person*).

• Lifetime healthcare costs for the average American are $631,000, of which the government pays for an estimated 48% while private insurers (like UnitedHealth and Blue Cross Blue Shield) pay 32% and consumers pay just 12%.

• When citizens don’t need to pay directly for something (like healthcare) and are given an expensive good / service for free (or well below cost), they tend to consume more of it – it’s basic supply and demand economics.

• This approach faces increasing challenges as USA, Inc. has gone deeper and deeper in debt to pay for it...

Note: *Adjusted for inflation, in 2005 dollars. Nominal amount would be $972 out-of-pocket healthcare spending per person in 2008 and $70 per person in 1960. Source: U.S. Department of Health & Human Services.
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USA Inc. | Income Statement Drilldown 107

USA Healthcare Spending Is Higher Than All Other OECD Countries Combined (with 35% of Other OECD Countries’ Combined Population)

Total Expenditure* on Health Among OECD Countries, 2007
$2,000
Public Private
$1,500
Total Health Spending ($B)
USA Spending on Healthcare in 2007 = $2.2T
All Other OECD Countries' Combined Spending = $2.2T
$1,000
$500
$0
Iceland
Luxembourg
Slovak Republic
New Zealand
Ireland
Finland
Hungary
Czech Republic
Denmark
Norway
Portugal
Greece
Sweden
Austria
Switzerland
Belgium
Poland
Turkey
Netherlands
Australia
Korea
Mexico
OECD average
Spain
Canada
Italy
UK
France
Germany
Japan
USA

Note: OECD data adjusted for Purchasing Power Parity. *Total expenditure on health measures the final consumption of health goods and services (i.e., current health expenditure) plus capital investment in healthcare infrastructure. This includes spending by both public and private services (including households) on medical services and goods, public health and prevention programs, and administration. Excluded are health-related expenditures such as training, research, and environmental health. Source: OECD, Organization for Economic Co-operation and Development is an international organization of 31 developed and emerging countries with a shared commitment to democracy and the market economy.
KPCB www.kpcb.com
USA Inc. | Income Statement Drilldown 108
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