Sep 30, 2020 - Health

Drugs aren't the reason the U.S. spends so much on health care

Reproduced from Kaiser Family Foundation; Chart: Axios Visuals

Voters care a lot about drug prices, but they’re not the main reason the U.S. spends so much on health care.

The big picture: The U.S. spends twice as much per person as other wealthy nations, according to a new Peterson-Kaiser Tracker analysis — and hospitals and outpatient care are the primary culprits.

By the numbers: The U.S. spent $10,637 per capita on health care in 2018. Comparable countries spent $5,527.

  • The overwhelming majority of the difference — 76% of it — came from spending on inpatient and outpatient care — not drugs, which get more attention but represent just 10% of the difference.

Why it matters: Cutting hospital spending is hard to do without causing real pain, and that has made it politically risky, as well.

  • A public option, like that proposed by Joe Biden, would put pressure on hospital prices. The intensity of that pressure would depend on the plan’s payment level and how many people it covers, which would affect its purchasing power.
  • A single-payer health plan would have even more leverage, though universal coverage — not price controls — is usually its supporters’ primary focus.
  • The hospital industry led the lobbying effort that killed a public option in the Affordable Care Act, and spent millions in the Democratic primaries this year advertising against Medicare for All.

What we're watching: President Trump has set out new price transparency rules for hospitals, though its likely impact on costs is unclear and the industry has challenged it in court.

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