The United States spends more of its income on health care than other
developed countries and that share is rising. It is an arresting statistic that
the U.S. now spends more on health care than it does on food.
In this new report MGI finds that the United States
spends approximately $480 billion ($1,600 per capita) more on health care than
other OECD countries and that additional spending is not explained by a higher
disease burden; the research shows that the U.S. population is not significantly sicker than the other countries studied.
Instead, MGI found that the overriding cause of high U.S. health care costs is the failure of the intermediation system — payors, employers, and government — to provide sufficient incentives to patients and consumers to be value–conscious in their demand decisions, and to regulate the necessary incentives to promote rational use by providers and suppliers.
Given the less than optimal access for all U.S. citizens (relative to peer countries), MGI concludes that major opportunities for cost improvement —even if not the full $480 billion—are as possible as they are necessary although no single reform is likely to succeed in achieving the needed rebalancing. To be effective, reform in health care will need to apply sound principles on both the demand and supply side of the system.
Interactive exhibit Explore two ways of looking at the cost discrepancies of the US healthcare system. View interactive graphic overview
A framework to guide health care system reform
MGI provides a framework for health care policy reform, including seven key principles that healthcare intermediaries can use to affect demand and supply of health care goods and services. Read more
Health care productivity In a 1996 report, MGI explores why health care's growing share of GDP makes it vitally important to improve productivity in this sector. Read more
