In my last two messages I've was talking about how the U.S. spends so much on medical care for comparably little in return. The U.S. is easily the largest spender in medical care in the world as a country - about $3.5 trillion annually – as well as the highest spender per person among developed nations. As I showed last time, a big part of that spending – and overspending - is the more than a trillion dollars a year in hospital spending. Even compared to the lower spending levels of other countries, American medical spending is over-represented in hospital spending, where daily average hospital spending (after adjusting for respective cost-of-living) is measured in thousands of dollars, several times that of other advanced countries.
As mentioned last time, comparing countries around the world, the U.S. is a clear negative outlier in the strong relationship between medical spending and longevity. The U.S. spends much more per person than any other country (adjusted for respective purchasing power) yet ranks far down the list in terms of positive health outcomes. According the the Centers for Medicare and Medicaid (CMS), total U.S. spending on medical care reached almost $3.5 trillion in 2017. That's up nearly 40% from the $2.6 trillion of 2010 and two and a half times the $1.4 trillion from the year 2000. U.S. medical spending of $255 billion in 1980 means that in 2017 Americans spent roughly 14 times on medical spending compared to what they did 37 years earlier.
David A. Pace, CFA
Note: These comments and articles are for informational purposes only. Nothing in these articles are meant to provide specific investment advice and are not a substitute for professional advice from a qualified adviser. Since every investor's investment and personal circumstances are unique, he or she should always enlist the help of a competent and trustworthy professional in addressing their financial needs.