A short history of health care in the US Notes for October 14

Main points

The point of today’s class was to go through the history and basic facts of the US health care system. How did we get here and where are we going? The Blumenthal articles concentrated on the employer based side of the system while the Emanuel and Stevens covered the public side.


One nugget from the Gruber article popped out at me. The public sector already accounts for about half of all health care spending.

Also, I heard a very good report on the history of the health system on NPR last week: Accidents Of History Created U.S. Health System.

Finally, Uwe Reinhardt ran some recent numbers in the New York Times. The highlights:

In 2007, the last year for which fairly precise estimates in American health spending are available, we spent $2.24 trillion on health care in this country. It amounted to 16.2 percent of our 2007 gross domestic product of $13.8 trillion and to $7,421 per person living within our borders. …

According to the resulting Milliman Medical Index, the average health spending for the typical American family of four will be $16,700 this year, up from $12,200 in 2005. The increase represents an average annual growth rate of 8 percent. …

At an annual growth rate of 3 percent, a wage base of $60,000 now will grow to $80,600 in 10 years. On the other hand, at an annual growth rate of 8 percent, a family’s total spending on health care would grow from $16,700 now to $36,000 in 10 years.

It follows that 10 years hence health care would swallow up 44 percent of this family’s gross wage base in 2019, before any allowance for employer- or employee-paid fringe benefits and taxes. It is the perfect storm into which America’s lower middle class now is being pushed, if the leaders of America’s health system continue to manage that system in their customary style, totally in abstraction from the fiscal agony that their expensive managerial and practice style visits on the rest of the country.

This page was written by Michael Green for PPE Senior Seminar, PPE 190, Fall 2009. It was posted October 24, 2009.
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