50 Non-Gray Shaded Years Of Healthcare Spending

Tyler Durden's picture


In the past 50 years, the way health care is financed has changed, with private payers and public insurance paying for more care. The California Healthcare Foundation has created this excellent interactive graphic shows who paid for the nation's health care and how much it's costs have shifted since 1960. The tree-map provides an intriguing exposition of the 'relative costs' but as The Economist adds, with regard the 'absolute costs': American healthcare costs increased by roughly 100 times, from $27 billion in 1960 to $2.6 trillion in 2010.

Via The Economist:

Although everything from homes prices to petrol increased a lot over the past half century, America's medical costs grew at an especially hefty rate, from 5% to 18% of GDP. Americans spend about twice as much as Canadians, Germans, French or British. Indeed, the federal government in recent years has begun to spend more on Medicare and Medicaid than on defense.


Among the chart's most arresting stats: the out-of-pocket expenses for prescription drugs was 96% in 1960; today it is a mere 19%—the federal government pays more than half the costs. Likewise, the feds pay for about half the total cost of hospital care, compared with about one-third when Ronald Reagan was elected president in 1980. (And this seemingly "socialized" healthcare spending, it bears noting, predates Obamacare.)





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Wed, 08/22/2012 - 10:51 | 2727292 Abraxas
Abraxas's picture

And where did all of this money go? My guess is that 99.9% went to big Pharma

Wed, 08/22/2012 - 10:51 | 2727301 Gandalf6900
Gandalf6900's picture

R and D

Wed, 08/22/2012 - 10:59 | 2727342 gdogus erectus
gdogus erectus's picture

Sorry. This article Conveniently leaves out the elephant in the room.

Wed, 08/22/2012 - 11:08 | 2727368 Dalago
Dalago's picture

"You don't have a right to the fruits of somebody else's labor. You don't have a right to a house, you don't have a right to a job, you don't have a right to medical care. You have a right to your life, you have your right to your liberty, you have a right to keep what your earn. And that's what produces prosperity."  - Ronnie Paul

Wed, 08/22/2012 - 11:38 | 2727414 Precious
Precious's picture

There will not be enough doctors anyway.

Wed, 08/22/2012 - 13:00 | 2727835 JeffB
JeffB's picture

Before or after "The Culling"?

Wed, 08/22/2012 - 11:12 | 2727394 gdogus erectus
gdogus erectus's picture

Sorry. This article Conveniently leaves out the elephant in the room. Where does the money go? Example. You know that $50,000 hip replacement that your mom just got? Take a wild ass guess how much the orthopedic surgeon gets. You know, the doctor that actually does the work with his saws, drills and hammers? That would be $475. Write a fucking article about where the othe $49,525 went. And yes, there Is an anesthesiologist and support to pay as well so throw another grand in there for them but my point stands. Your co-pay is about all the doctor gets. The rest is a complete scam.

Wed, 08/22/2012 - 11:34 | 2727422 Precious
Precious's picture

So get it somewhere else like India.

Wed, 08/22/2012 - 11:32 | 2727469 luhar
luhar's picture

thats amazing!! My college bud thats an ortho doc pulls down 500k a year, I had no idea he was doing 1,000 hip replacement surgeries a year!!!

Wed, 08/22/2012 - 11:36 | 2727485 Precious
Precious's picture

Maybe he prescribes for Major League Baseball on the side.

Wed, 08/22/2012 - 12:26 | 2727701 gdogus erectus
gdogus erectus's picture

Well, get this. The reality is, full hip reacement is now down to 45 min! for the orthopod. Team buttons things up after the heavy lifting so his hourly rate really is that good. Even after the $17,000 per MONTH malpractice insurance payments....

Wed, 08/22/2012 - 12:40 | 2727757 Metalredneck
Metalredneck's picture

The system works.

Wed, 08/22/2012 - 11:41 | 2727515 boogerbently
boogerbently's picture

"Sorry. This article Conveniently leaves out the elephant in the room."

ALL healthcare related articles leave out this "elephant in the room."

Wed, 08/22/2012 - 13:22 | 2727910 Buckaroo Banzai
Buckaroo Banzai's picture

"16 By their fruit you will recognize them. Do people pick grapes from thornbushes, or figs from thistles? 17 Likewise, every good tree bears good fruit, but a bad tree bears bad fruit. 18 A good tree cannot bear bad fruit, and a bad tree cannot bear good fruit. 19 Every tree that does not bear good fruit is cut down and thrown into the fire. 20 Thus, by their fruit you will recognize them." -- Matthew 7

Wed, 08/22/2012 - 13:46 | 2728021 exi1ed0ne
exi1ed0ne's picture

One man's bad fruit is another mans wine.

Wed, 08/22/2012 - 11:41 | 2727510 Bicycle Repairman
Bicycle Repairman's picture

Some of the R&D is worthwhile.  Lots of it, however, is not for various reasons.  Under the current system it all gets paid for.

Wed, 08/22/2012 - 10:56 | 2727324 john39
john39's picture

a subsidiary of Umbrella Corp., the world-wide leader in military/defense, banking, pharmacueticals, biotech, chemical production, oil....   etc.   long live umbrella corp.

Wed, 08/22/2012 - 11:10 | 2727380 nantucket
nantucket's picture

Even more goes to "Big Government".  Let's demonize them with the "Big" label.  Let's scare everyone with that buzz word.  Why do people rally to hate "Big Oil", "Big Pharma", etc?  They don't take 30% of my money.  Big govt does.

Wed, 08/22/2012 - 11:15 | 2727404 blunderdog
blunderdog's picture

"Big Oil" and "Big Pharma" are the government's EMPLOYERS.  Government WORKS FOR THEM.

That's why some folks are hostile towards all three.

Wed, 08/22/2012 - 11:43 | 2727525 Bicycle Repairman
Bicycle Repairman's picture

As a decentralizer I see "Big" as inherently "Bad".

Wed, 08/22/2012 - 13:08 | 2727869 Watauga
Watauga's picture

From a recent Mises Institute Daily email on the book Organized Crime: The Unvarnished Truth About Government by Thomas J. DiLorenzo:


"Friedman noted that 56 percent of all hospitals in America were privately owned as for-profit enterprises in 1910.… It took decades, but by the early 1990s government had taken over nearly the entire hospital industry.… Friedman's key contention was that, as with all bureaucratic systems, government-owned or government-controlled healthcare created a situation whereby increased "inputs" such as expenditures on equipment, infrastructure, and the salaries of medical professionals, actually led to decreased "output" in terms of the quantity and quality of medical care.… This kind of result is present in all government-run bureaucracies because of the absence there of any kind of market feedback mechanism. Since there are no profits in an accounting sense in government, there is no reliable mechanism for rewarding good performance and penalizing poor performance. (pp. 26–7, emphasis in original)"

Wed, 08/22/2012 - 16:31 | 2728630 Bicycle Repairman
Bicycle Repairman's picture

This is just one aspect, an important one, where this goddamn system is completely removed from reality.  Time for shock therapy.

Wed, 08/22/2012 - 10:51 | 2727293 Gandalf6900
Gandalf6900's picture

colour in the blank spots

Wed, 08/22/2012 - 10:52 | 2727303 q99x2
q99x2's picture

Long live the species.

Wed, 08/22/2012 - 11:45 | 2727538 boogerbently
boogerbently's picture

Although, unattainable healthcare would cut down (through attrition) on the largest segment of the population that uses the most govt. funds.

Wed, 08/22/2012 - 10:56 | 2727306 John Law Lives
John Law Lives's picture

Health care costs (per capita) would certainly decline in the US if people choose to live healthier lifestyles.  Some exercise and better eating habits go a long way.  An ounce of prevention...

Wed, 08/22/2012 - 10:57 | 2727331 SwimmininNawlins
SwimmininNawlins's picture

But I is a American.  I can eat fast food and then make everyone pay for my unexpected obesity related health costs, right?  Cuz it's the land of the free /sarc


We're so fucked as a country.....

Wed, 08/22/2012 - 11:18 | 2727417 John Law Lives
John Law Lives's picture

There is a Wal-Mart grocery store near my home that attracts quite a crowd of folks who use food stamps.  I see the kind of food they tend to purchase and how overweight many of them are.  Imagine how much health care costs (per capita) could be lowered if people ate healthier food and exercised more often... and doing those 12-ounce curls whilst watching football doesn't count as exercise...

Wed, 08/22/2012 - 11:19 | 2727418 blunderdog
blunderdog's picture

This may be true, but only during the early period of life when most people are either paying out-of-pocket or on private insurance plans.

Once someone reaches 65, it's all paid for by Medicare, and the simple part is that people spend most of their healthcare money during the final 2 years of their life.

If you want health-care costs overall to go down, there's something to be said for encouraging healthier living.  If you want publicly-funded health-care costs to go down, you want people living as unhealthily as possible, so they'll die before reaching 65 and avoid the dole payments altogether.

Wed, 08/22/2012 - 10:52 | 2727307 Sudden Debt
Sudden Debt's picture

At the slaughterhouse, they have a more effective way to handle sick and old animals... and than we eat them...


Wed, 08/22/2012 - 13:10 | 2727872 Joe Davola
Joe Davola's picture

You don't have to be the fastest water buffalo in the herd, just faster than the next.

Wed, 08/22/2012 - 10:54 | 2727314 Jason T
Jason T's picture

education and healthcare.. what's left of the US economy..our golden goose at this point. 



Wed, 08/22/2012 - 11:08 | 2727370 MachoMan
MachoMan's picture

even on a local level, we're impotent to stop it...  let's say you're a local business owner and your city wants to raise the property taxes to pay for schools, policemen, and firemen.  Let's also presume that you're sick of getting bullied by local politicians into being forced to decide between having or not having necessary services rather than cutting costs with unnecessary paper pushers/government waste (not that police/fire/etc don't waste a shit ton of money) and you want to oppose this most recent tax increase.  Leading up to the vote, all of the local school teachers, policemen, firemen, and all of their families, friends, etc. all place yard signs in favor of raising the tax...  they picket and waive signs on your busiest local thoroughfares, staring down all who pass...  they send out a similar message on all social networking and at all social functions...  they notify all school children, etc.

Now, you're up against a very large and mobilized voting block...  how do you begin to gain enough critical mass to push back the increase in taxes?  If you go ahead and become vocal and exercise your political right to free speech, then how does that impact your business?  What is the path of least resistence?  Do you have any school children?  Do you live in a bad neighborhood?  Do you drive often enough to have any chance at coming into contact with law enforcement?

The thing is, it's not just who is on the books working for federal, state, or local government...  it's so interwoven into the economy that even people who don't want anything to do with living on the teet and fundamentally disagree with a robust government are practically impotent to defend against largesse and expansion...  if you speak up, then you're out of business and, further, cannot then seek the only remaining decent jobs available, government jobs.  This is how the cancer spreads.

Wed, 08/22/2012 - 10:54 | 2727315 Gandalf6900
Gandalf6900's picture

How is it that you americans come up with the wildest illnesses, of which 99% of other countries have never heard of?

Build on top of that and entire structure to cater these new needs and voilà, there is where your money went

Wed, 08/22/2012 - 11:19 | 2727420 I am on to you
I am on to you's picture

Aint that what the rest of us are copying,sir Gandalf if your European,i think so,and if you come from the north,scandinavia,you know where the wind is blowing up there.

Privatisation of the healthcare system,and what kind of a fish is this anyway:

Privatisation,and then deduct it on the tax system,then how private is it then,this sick healthcare,taxdeduct,nothing else!

Det er som familien, Kløvedal på Cristiania,de satte sig på alle de bedste boliger:Hmmm!

Wed, 08/22/2012 - 14:07 | 2728105 Haager
Haager's picture

Kløvedal, he? Jeg så en rapport om Christiania på TV - lang tid tilbake , jeg vet virkelig lite. Fortell!

Wed, 08/22/2012 - 10:57 | 2727318 Dr. Richard Head
Dr. Richard Head's picture

I am soooo fucking tired of this damned argument "the federal government in recent years has begun to spend more on Medicare and Medicaid than on defense."  In the world of off-budget military spending, no one knows for sure the entire amount of treasure spent on nation building.  Makes me fucking ill, which apparently is an aggregate demand pusher of GDP. 

Wed, 08/22/2012 - 10:58 | 2727335 john39
john39's picture

that argument also assumes that we should be spending tremendous amounts of money on "defense" spending....  which oddly, ends up positioning men and machines pretty far from the "homeland", you know, for defense purposes...  to protect the little people here in the heartland.

Wed, 08/22/2012 - 11:16 | 2727392 sessinpo
sessinpo's picture

And I'm so sick and tired of those that don't see the difference that military defense spending, off budget or on budget, is for the defense of the nation as a whole while medical spending is expenditures for a single person, whereas, I can at least fanstasize that my taxes are going to protect myself and my loved ones through military expenditures as opposed to my taxes going to support a social pyramid scheme that benefits a single person that may or may not have chosen to live an unhealthy lifestyle. Having said that, I'd like to see both downsized tremendously.

Wed, 08/22/2012 - 13:49 | 2728032 Dr. Richard Head
Dr. Richard Head's picture

Yeah, sure.  Drone bombings of wedding parties, innocent citizens, and emergency responders in other nations sure doesn't stir up resentment of the US.  It's all for our "benefit".  RIGHT?!?!?!?!  Is that grape or cherry KoolAid?  OH YEAHHHHHH!!!!!!!!!!!!!!!

Wed, 08/22/2012 - 13:55 | 2728052 Haager
Haager's picture

If he's not awake yet he possibly never will be, so let him sleep. Its just another Delta or Epsilon, satisfied with the situation around him.

Wed, 08/22/2012 - 10:55 | 2727320 Silversem
Silversem's picture

I wish here was a possibility to trade the rising healthcarespending. Preferably with a CFD. That would be the trade of the century!

Wed, 08/22/2012 - 11:00 | 2727339 Hype Alert
Hype Alert's picture

CBO just warned of recession in 2013 due to Fiscal Cliff


Where are the rating agencies?

Wed, 08/22/2012 - 12:36 | 2727747 Fox Moulder
Fox Moulder's picture

Moody's just gave the Fiscal Cliff a AAA rating.

Wed, 08/22/2012 - 11:01 | 2727352 Its_the_economy...
Its_the_economy_stupid's picture

The more we spend on "sickcare" the less healthy we get. Big Pharma wants everyone on as many daily meds as can be swallowed per hour. Keep swallowing. Bullish!

Wed, 08/22/2012 - 11:04 | 2727353 Cognitive Dissonance
Cognitive Dissonance's picture

Why is health sickcare more expensive? Meaning a larger percentage of GDP?

Because they can charge more. It is that simple.

It follows along the same idea as to why a college education is so much more expensive today (meaning a larger percentage of GDP).

Because they can charge more.

A gas will always fill any (confined) space it enters. Remove the incentive to restrict costs and the cost expands to suck up all available dollars.

Wed, 08/22/2012 - 12:39 | 2727755 Fox Moulder
Fox Moulder's picture

The law that requires hospitals to treat everyone (EMTALA) also allows cost shifting to pay for it. That's why they can charge insured patients many times the actual cost of care.

Wed, 08/22/2012 - 13:00 | 2727832 Don Levit
Don Levit's picture

Cognitive Dissonance.

You are on the right track.

Comparing health insurance premiums to the cost of college is a great analogy.

While education requires loans (and grants), now with the ACA, health insurance premiums will be subsidized by the taxpayers.

These general taxes for the general welfare go directly to the insurance companies for their pricey insurance.

Hmm.  I wonder if subsidies will cause faster increases than loans?

Don Levit

Wed, 08/22/2012 - 11:05 | 2727365 Dr. Gonzo
Dr. Gonzo's picture

For good personal health and financial health the best thing to do is stay away from The American Healthcare System as best you can...Personal note: 8 months ago I stopped all fast food, all pop, and all garbage in general eat much less in general and eat a green kale shake in the morning. Well. I lost 35 lbs of fat and have a slim waste again and feel friggin awesome with tons of energy. I did it because I don't want them to ever get their hands on me. I will do anything to never go to a hospital. Bad things happen there.

Wed, 08/22/2012 - 12:18 | 2727670 TeresaE
TeresaE's picture

I've been juicing greens too. And I've lost five pounds in less than two weeks.

Make sure you mix your fruits & veges Dr. Gonzo, you need a wide variety of nutrients and eating the same thing over and over and over can concentrate poisons and the like.

Just a thought, but everything else is 100% right on.  Real health, not pill health.

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