Overview of health care financing

[Sommer]

Health care in the US is technologically advanced but expensive, costing about .6 trillion in 2018, which was 16.9% of gross domestic product (GDP) (1). This percentage is significantly higher than in any other nation. According to the Organization for Economic Cooperation and Development (OECD), in 2018 the next highest spending countries were Switzerland (12.2% of GDP) and France, Germany, Sweden, and Japan (each about 11%), while the average of the 35 OECD countries (OECD35) was 8.8% (2).
The absolute amount and the rate of increase of health care spending in the US are widely regarded as unsustainable. Consequences of increased US spending on health care include the following:

Increased government spending (resulting in higher national debt, decreased funding for other programs, or both)
Slowed growth or a real decline in workers’ earnings due to higher payments for health insurance premiums
Increased costs to employers (resulting in increased product cost and movement of jobs to countries with lower health care costs)

Even though US health care spending per capita is the highest in the world, many people in the US do not have health insurance, whereas other developed countries, despite lower per capita expenditures, ensure universal access to health care. An estimated decrease in uninsured people in the US (from 48.6 million in 2010 down to 29.3 million in 2017) has been attributed to the Affordable Care Act (ACA) (3); however, recent changes to the ACA may be reversing this trend. In 2019, the US Census Bureau reported that 27.5 million people (8.5% of the population) were uninsured in 2018, an increase from 25.6 million (7.9%) in 2017, with public coverage decreasing 0.4% and private coverage remaining statistically unchanged (4). The Congressional Budget Office has estimated that the 2019 elimination of the ACA individual mandate penalty (tax penalty on US residents who do not purchase health insurance) will increase the number of uninsured by 13 million and reduce federal deficits by billion by 2027 (5).
Thus, US health care spending remains in flux, as the government again struggles to find responsible ways to reduce health care costs.