As presidential hopefuls debate how much more money to pour into our broken system, they should consider how much we already spend.
In a new report out Monday, my Johns Hopkins colleagues and I found that nearly half of our federal tax dollars are being spent on health care. Bear with me because I know these are a lot of numbers. But let’s add it up.
Start with the 27% of federal spending that goes to Medicare, which covers seniors and the disabled, and Medicaid, which covers low-income Americans.
Next, include Social Security spending that gets siphoned into health care, through Medicare co-pays and other expenses. More than 1 in 5 federal dollars goes to Social Security. According to a Kaiser Family Foundation study, seniors are spending nearly half of their Social Security payments for medical expenses. That amounts to an additional 11% of the federal budget being spent on health care through the Social Security program.
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That’s not all.
The military health care system consumes more than 1% of the federal budget, separate from spending on health care for veterans, which is more than 4% of federal spending. And then another 1% is spent on health benefits for the 9 million federal employees, retirees and their family members.
Finally, we estimate that 3% of federal spending goes toward interest on the portion of our national debt attributable to health care spending.
The substantial price tag
All total, our Hopkins team estimated a grand total of 48% of all federal spending going to the country’s medical-industrial complex.
As if that weren’t enough, we haven’t even included what’s spent on employer-sponsored health benefits. The average American spends $ 11,121 on health insurance a year. Employers contribute an additional $ 5,288 to your health care cost from a pool of money allocated for wages and benefits — money that could otherwise go to your paycheck.
That’s a hefty tab!
No wonder Americans get ticked off when basic medical care is not covered. American workers are spending 55% more on insurance premiums than they were a decade ago. Over the same time, their deductibles and co-pays are going up. Remarkably, on top of what people spend on health care through taxes and insurance, the average American now spends approximately $ 3,000 each year on services that are not covered.
All this means that if you earn $ 52,000 a year, you are contributing $ 22,474, nearly half of your allocated wages, on health care.
Don’t add more cash, cut the waste
What do we do about it? The answer is not to throw more money into the system as most political candidates like to propose in grandiose plans they parade around in an election cycle. As I learned when I researched my new book, “The Price We Pay,” we already spend enough money to provide every American with the best health care on the planet. It’s time to cut the waste.
We need to examine health care’s overpriced services, middlemen and the perverse incentive structure that promotes unnecessary tests and procedures. The lack of transparency around the business of medicine has created a fog that enables the price gouging and kickbacks that profit some on the backs of everyday Americans. Given the toll of health care on everyday Americans and businesses, and how our astronomical spending threatens every other national priority, transparency’s time has come.
We also need to change the way we talk about health care spending. The next time you catch somebody saying their “health insurance plan” or their “employer” or “Medicare” covered their health care bills — correct them. You and them and all of us are paying the bills through tax dollars and your insurance premiums.
Let’s change the lexicon in America to point out what’s really happening — a shell game of taking money from everyday Americans to enrich the medical industry.
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Last year, health care became the largest business in the United States. This boom has been good news for many large hospitals and insurance companies, which are reporting their highest profit margins in history. However, these impressive numbers obscure an ugly reality. An estimated 30% of our bloated $ 3.5 trillion health care spending is wasted on services that have nothing to do with improving health.
Politicians are great at finger-pointing and piling on. They are even better at promising entitlement benefits without showing how they would pay for them. Last year, health care’s special interests spent half a billion dollars on lobbying. Every stakeholder seems to have a powerful voice in Washington, except for one — the patient.
Let’s also make our voices heard. This White House is implementing a recent price and quality transparency executive order. Speak up! Leave a public comment on the department of Health & Human Services website. The swamp of Washington lobbyists is going to share the same old special interest arguments on the public comment website. Our voices as patients and health care workers should also be heard. It’s time Washington stops talking about how to fund our broken health care system, and start talking about how to fix it.
Dr. Marty Makary is a Johns Hopkins professor and author of the new book “The Price We Pay: What Broke American Health Care — and How to Fix It.” Follow him on Twitter: @MartyMakary