HHS Makes the Case for Health Reform: The Costs of Inaction

On Monday March 30, the Department of Health and Human Services released their report on The Costs of Inaction - the Urgent Need for Health Reform.

The report lays out the the challenge of controlling health care costs.

• "Employer-sponsored health insurance premiums have more than doubled in the last 9 years, a rate 6 times faster than cumulative wage increases.¹
• The United States spent approximately $2.2 trillion on health care in 2007, or $7,421 per person.² This comes to 16.2% of GDP, nearly twice the average of other developed nations.³
• Health care costs doubled from 1996 to 2006, and are projected to rise to 25% of GDP in 2025 and 49% in 2082.⁴
• The proportion of spending attributable to Medicare and Medicaid in the health system is expected to rise from 4 percent of GDP in 2007 to 19 percent of GDP in 2082, making it the principle driving force behind rising federal spending in the decades to come.⁵
• Health care costs add $1,525 to the price of every General Motors vehicle. The company spent $4.6 billion on health care in 2007, more than the cost of steel.⁶
• As a result of these crushing health care costs, American businesses are losing their ability to compete in the global marketplace. Health care at General Motors puts the company at a $5 billion disadvantage against Toyota, which spends $1,400 less on health care per vehicle.^7,8
• The average cost of an employer-based family insurance policy in 2008 was $12,680, which was nearly the annual earnings of a full-time minimum wage job.⁹
• From 2000 to 2008, the percentage of employees with an annual deductible greater than $1000 increased from 1% to 18%. Among small businesses, more than one in three workers must spend at least $1000 out of pocket before their health benefits kick in.¹⁰
• Half of all personal bankruptcies are at least partly the result of medical expenses.¹¹
• The typical elderly couple may have to save nearly $300,000 to pay for health costs not covered by Medicare alone.¹²
• Eight in ten Americans are dissatisfied with the total cost of health care,¹³ and over half report paying for the cost of a major illness as a major problem.^14"

The report cites the "persistent gaps in quality, in spite of the vast resources invested." The US scored a 65 out of 100 on the most recent National Scorecard for Health System Performance reviewing 37 indicators of health system performance.


Rebecca Adelman of HHS, in a companion piece, desribes the increasing problems with health care access. According to the report, "health care costs doubled from 1996 to 2006, and more Americans are being left out of the health care system than ever before. An estimated 87 million people -- one in every three Americans under the age of 65 -- were uninsured at some point in 2007 and 2008."