• Spending overview
• Policy overview
• Diseases overview

Spending overview

The US spends more than any other country in the world on healthcare, at an estimated 16.3% of GDP in 2009. Healthcare expenditure is likely to continue to grow at a faster pace than overall GDP, so that its share in GDP is likely to continue to rise. Private spending represents more than one-half of total expenditure on health in the US, which is high by international standards. Despite the relatively small share of public spending (the public share is about 70% or more in most other developed OECD countries), its absolute level per head is still high given the high level of GDP per head and the high level of overall healthcare spending in GDP.

The high spending on healthcare is partly explained by problems in the incentive structures for healthcare providers and the system of relatively fragmented private coverage. This fragmented coverage reduces negotiating power vis-à-vis providers and raises overheads. Many other rich countries have central negotiations with healthcare providers or set prices centrally, and this limits costs. The substantial liability insurance fees that are necessary because of the large number of medical malpractice lawsuits also add to healthcare costs. The federal government operates several health programmes, the most important of which are Medicare, which provides coverage for people aged 65 and over, and Medicaid, a joint federal-state programme for those on low incomes. The two programmes combined account for around 20% of federal government expenditure.

Policy overview

After much partisan wrangling, the House of Representatives on March 21st passed sweeping healthcare reforms to deliver the president, Barack Obama, a badly needed but qualified victory on one of his central policy goals. The healthcare bill, passed along with a separate package of amendments, marks one of the most ambitious and controversial legislative changes in decades. The new bill—formally entitled the Patient Protection and Affordable Care Act—is being described as one of the most important pieces of social legislation since the enactment of Medicare in 1965 and Social Security in 1935.

The legislation's landmark feature is its attempt to widen dramatically insurance coverage—partially remedying a lack of universal health insurance that social liberals consider morally wrong in a rich country like the US. The new legislation will bring coverage to 32m more people, estimates the non-partisan Congressional Budget Office (CBO). Other key provisions include banning insurance companies from refusing to cover people with pre-existing medical conditions or dropping coverage when people become ill. Many employers will be legally obliged to provide health insurance to their employees or pay a penalty. Similarly, individuals will be legally required to buy insurance or pay a penalty—though those on low incomes will receive subsidies. The legislation also provides for the creation of private-sector insurance exchanges in each state, where individuals and employers will be able to shop for the best coverage—a move advocates hope will lower the cost of premiums.

Diseases overview

Life expectancy in the US is relatively low, given its level of development and income. Average life expectancy at birth stood at an estimated 78 years in 2009, which ranks the US in 20th position out of 27 OECD countries and well below the average life expectancy level of 82 years for Japan. The low life expectancy is partly related to a relatively high rate of deaths as a result of violent crime and accidents. Gaps in life expectancy have also increased substantially since the beginning of the 1980s.

A number of life-style problems are affecting the health and life expectancy of Americans. An important concern is obesity. According to the Centers for Disease Control (CDC), 67% of adults aged 20-74 were obese in 2003-06, and the share remains on an upward trend. On the positive side, smoking rates, which are associated with a number of diseases, remain on a clear downward trend and are relatively low. The main cause of deaths in the US is heart disease, but mortality rates are on a downward trend owing to improved risk detection and better treatment options, among other factors. Cancer is the second-biggest cause of deaths. Mortality as a result of a stroke, the third most important cause of deaths, has also declined in line with heart disease, with both being affected by high blood pressure and high cholesterol.