As Government's Share Of Health Spending Rises, U.S. Edges Closer To Norm

In the next year or two, government will become the majority shareholder in America's "capitalistic" health care system, paying for more than 50 percent of all health costs, a new report by federal officials suggests.

Much has been made of that milestone—including by this reporter. But, given that we've drifted towards the 50-percent benchmark for decades, what does it really mean beyond a nice round number?

For one thing, we're inadvertently closing the gap with other developed countries. Gail Wilensky, a former director of the agency that runs Medicare, told us, "the rest of the world tends to think of us as being dominated by the private sector." She said there may be an "advantage for saying that the majority of health spending comes out of the public sector in conversations with the rest of the world."

That gap has been a target of critics at home and abroad who, like Michael Moore in his documentary "Sicko," argue a health system beholden to profit-making private companies is inefficient, costly and unfair. A Reuters report on Moore's 2007 film suggested Europeans may want to tune in "for the sheer fun of seeing Americans wallow in problems they solved years ago."

 

While several European governments have increased their roles in health care over the past decade, overall their support has been steady. The most aggressive European governments now pay as much as 80 percent of total health costs, according to the Paris-based Organisation for Economic Co-operation and Development.

However, Canada — a favorite effigy for opponents of "socialized" medicine—covered only about 70 percent of its health costs with public dollars in 2007, far less than most European countries. The government of Switzerland, which has a more mixed public-private health system than its neighbors, pays for slightly less than 60 percent.

While Canada and Switzerland spend more than the government-centric health systems in France or the U.K., their annual spending remains far lower than America's. Today's report says we'll shell out roughly twice as much per person this year.

That could point to another take away from today's health spending. In the U.S., health spending has increased, even as the public sector has shouldered more of the load. That could defuse the argument—posited by Moore and others who attack America's private health care sector—that the problem with the system is who pays for it. The biggest drivers of health spending for both public and private payers are rising prices, increasingly aggressive use of medical services, and an older, sicker population, according to the report.

Conservative health economist John Goodman dismissed the notion that it matters whether care is financed by government or private insurers: "There's not much difference in the way Medicare pays and the way private insurance pays. It's really all pretty much the same." And, while well-meaning people debate the fairness of both sectors, they're both pretty expensive.

Weaver is a reporter for Kaiser Health News, a nonprofit news service.