Healthcare expenditure in the US and Co.

Sometime last week, I spent about one to two hours trying to answer a few questions. I wanted to know how much the US was spending on healthcare (HC) and what percentage of that HC spending was going into health IT (HIT) infrastructure. This was mostly for my own curiousity, an attempt to answer the question of whether we were spending a proportionate amount of our HC funds on IT as compared to other nations, or whether we had outrageously disparate statistics. My intention was not to do a cost analysis, but just to see what was out there, reported by various agencies. I assumed that a lot of the numbers would be public information, especially those pertaining to government investments in HC.

The entire process was a bit of a failure. This first table is straightforward enough; it shows that healthcare expenditure has been increasing steadily over the last decade.1 Since 2009, the percent of GDP spent on healthcare has stabilized around 17.3%. However, this is expected to increase this year and further in 2015 as more terms of the ACA go into effect. Some projections predict the per capita spending to increase to upwards of $13,000 by 2020.2

Year US population
HC expenditure
(trillions $USD)
of GDP
Per capita
2020 ~4.4 ~19.2 ~13,000
2017 ~3.7 ~18.4 ~11,000
2013 316 2.9 17.3 9,177
2012 313 2.8 17.2 8,915
2011 311 2.7 17.3 8,658
2010 309 2.6 17.4 8,411
2009 306 2.5 17.4 8,170
2008 304 2.4 16.4 7,936
2007 301 2.3 15.9 7,649
2006 298 2.2 15.6 7,264
2005 296 2.0 15.5 6,889
2004 293 1.9 15.5 6,508

But this was not the more interesting question for me; that was how much we spend on HIT out of all these trillions. These numbers are much harder to find. The US does not provide socialist healthcare, so HIT spending can only be tracked through hospital budgets and third-party provider revenues. I was not about to get into this, but I looked around and found a few reports generated by governmental entities and private consulting firms. Since these is no established way for calculating these numbers, a lot of them, especially the projections, vary greatly between sources. The $19.3 billion and $16.6 billion for 2017 and 2012 for example, come from a Deltek report generated in 2012, “Health Care and Social Services Market, 2012-2017.”3 A RNCOS report generated a year earlier states that HIT spending in 2011 could amount to $40 billion and was growing at the rate of 24% a year.4 The HIT spending for 2010 and 2011 in this table below also come from the RNCOS report.

The numbers are so disparate that it is hard to make the case for one over the other. But it does seem to confirm that HC expenditure is rising and at least some of that is an increase in HIT investment, due in part to the ACA and Hitech Act.

Year HC expenditure
(trillions $USD)
HIT spending
(billions $USD)
HIT per capita
Percent of HC
spending on HIT
2017 ~3.7 19.3 (40.0+) 58.8 (120.0+) 0.6 (1.2+)
2012 2.8 16.6 53.0 0.6
2011 2.7 8.2 26.4 0.3
2010 2.6 6.8 22.0 0.3

So how much do people around the world spend on healthcare and HIT in particular? Health Affairs published an article detailing health care spending (focused on HIT) in OECD (Organization for Economic Cooperation and Development) countries.5 I pulled out the numbers for the US, Canada, Germany, and the UK, countries with rather comparable standards of living. The numbers are for 2003.

US Canada Germany UK
Total HIT investment (billions $USD) 0.1 1.0 1.8 11.5
Per capita HIT investment ($USD) 0.43 31.90 21.20 192.80
Per capita healthcare expenditure ($USD) 5,635 3,003 2,996 2,231
% expended on HIT 0.008 1.0 0.7 8.6

When you look at this, it’s completely deceptive. That $0.1 billion (or $125 million) the US spends on HIT looks trivial compared to the other three nations! But this circles back to the fact that we are not providing socialist healthcare, so much of the true spending on HIT is occurring privately, on budgets that are less available for the public’s prying eyes. Those studies by Deltek and RNCOS probably hit closer to the mark, and show percentages of healthcare budgets that are more comparable to those of the three other countries above. We are still spending a lot more than them overall per capita, but a similar percentage of that spending seems to be going towards HIT in recent years.

Does this promise betterment? That’s not the question I’m trying to answer. I suppose I can say now that at least we’re spending the right amount of resources, but even that’s a bit of a stretch. Nonetheless, there is definitely a burst of activity waiting on the horizon come the next few years and outcomes should be interesting.

1 Centers for Medicare and Medicaid Services: “National Health Expenditure Tables” (2012)

2 Centers for Medicare and Medicaid Services: “National Health Expenditure Projections 2012-2022” (2012)

3 Deltek: “Health Care and Social Services Market, 2012-2017” (2012)

4 RNCOS Report: “US Healthcare IT Market Analysis” (2011)

5 GF Anderson et al. “Health Care Spending and Use of Information Technology in OECD Countries.” Health Affairs. Vol. 25, No.3, pp. 819-831, 2006.

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