By Joseph Q. Jarvis | Special to The Tribune | Published: 24 January 2025
I believe most Americans have some notion that health care costs are a problem in the United States. This is because millions of Americans owe medical debt; 14 million Americans owe more than $1,000 in medical debt.
This means that each of us likely knows someone who owes medical debt.
Fewer Americans are aware that U.S. health care costs are far higher than anywhere else in the world. Americans spend just less than $15,000 per person on health care, nearly twice as much on average as other developed countries.
Health care costs are rising faster than GDP growth, meaning that an ever-increasing part of our total economic output goes to the health care system, a trend that is clearly unsustainable. The vast majority of health care expenditures are paid by direct taxation or written off through federal or state tax policy. Americans pay more taxes to support health care than do the citizens of any other country.
These facts present an alarming scenario for all of us to consider. Our economy cannot continue indefinitely to sustain health care costs growing faster than the gross domestic product. Nearly ten years ago, Warren Buffett called the growing share of GDP going to health care the “tapeworm” that is sapping American industrial competitiveness.
It is unlikely that the American economy will survive if we don’t stop the growth of GDP share going to health care before it reaches 25%. The USSR collapsed when its military grew to consume 20% of its GDP. We either fix our health care system or watch our economy implode.
But health care costs leading to debt are not just a problem for individual American families or the overall American economy. Health care debt has become the biggest driver of federal government debt. Here is the opening paragraph of a recent report on federal debt by the Peter G. Peterson Foundation:
“As the recent long-term projections from the Congressional Budget Office (CBO) show, the national debt is on an unsustainable path. Under current law, the nation’s debt trajectory will rise from nearly 100 percent of gross domestic product (GDP) in 2024 to 166 percent in 2054. One of the largest drivers of that rising debt is federal spending on major healthcare programs, such as Medicare and Medicaid. Such spending is projected to rise by 73 percent over the next decade and will exceed all other categories of federal spending in 2028. By 2054, such spending will account for 30 percent of total federal outlays, exceeding the total amount spent on discretionary programs, such as defense and education, by 51 percent.”
In effect, this report is saying that if we Americans don’t reform how we do health care business, and instead continue to allow health care costs to grow faster than the gross domestic product, not only will millions more American families be bankrupted by medical debt, but so will the federal government. We will lose our competitive edge as a nation and perhaps drop out of first world status. Or worse, we could implode, as did the Soviet Union.
Real and sustainable health care system reform is not optional for us. We either change the way we do health care business, or we will not thrive as a nation. We can’t kick this can down the road even another decade.
There are improvements in health care system functions that can lead to substantial reductions in the growth of health care costs, even to reducing the portion of gross domestic product going to health care. The two most important among these measures would be reducing the overhead or inefficiency of U.S. health financing and improving the quality of the health care we all receive.
Inefficiencies in American health care financing, mostly due to the high overhead of private, for-profit health insurance, cost us more than $500 billion in waste every year. A similar amount of waste occurs each year because the American health care system features suboptimal quality care. Efficient and high-quality health care will cost less and save both lives and our economy.
Dr. Joseph Q. Jarvis is a public health physician, chair of the Utah Cares Political Issue Committee and author of several books, including “The Purple World: Healing the Harm in American Health Care” and “What the Single Eye Sees: Faith, Hope, Charity, and the Pursuit of Discipleship.”