In 2007, the U.S. spent more than $2.26 trillion on health care, or $7,439 per person, up from $6714 in 2006-- even though nearly 50 million Americans have no health insurance at all! Despite the fact that Americans spend more per capita on health care than any other nation on Earth, the UN World Health Organization (WHO) ranks the US below most other first world nations when it comes to the rate of infant mortality and the longevity of its citizens. Amongst 14 major first world economies, the US ranks 1st in infant mortality with 7 infant deaths per 1000 live births and ranks last in average life expectancy for its citizens.
Himmelstein, an associate professor at Harvard and doctor at Cambridge Hospital determined that 31 cents out of every dollar spent on health care in America is for administrative cost. So out of the $2.26 trillion spent on health care in the US in 2007, approximately $700 billion a year is spent on administrative cost. In Canada, administrative cost account for only 17 cents per dollar. So its obvious that our complex health insurance system in the US is costing Americans several hundreds of billions of dollars annually in administrative waste.
It is estimated that private health insurance and other worker benefits add $1,000 to $1,500 to the cost of manufacturing a car in America, while it only adds approximately $150 per car in Japan. GM, however, claims health care costs added between $1,500 and $2,000 to the cost of every automobile it manufactures. The Business Roundtable, which represents the largest U.S. corporations, released a study showing that for every $100 spent in the United States on health care, a group of five of our leading economic competitors (Canada, Japan, Germany, the United Kingdom and France) spend only 63 cents! Furthermore, it has been estimated that illness and medical bills contributed to 62% of all bankruptcies in the US in 2007!
Most single payer advocates view Medicare as a public health insurance model that the whole nation should emulate. However, Medicare cost were over $477 billion in 2009 while covering only 45 million people, that's over $10,000 in cost per individual-- higher than the already extremely high per capita cost for health care expenditures in the US in general. Of course, the elderly usually have significantly higher health care expenditures than the younger segments of a society. But Medicare cost have almost always risen faster than the rate of inflation since its inception-- and is expected to be insolvent by the year 2017. So no matter how much some people love the US Medicare system, its continuously escalating and unsustainable cost could cause the system to collapse in less than a decade.
Medical Savings Accounts have been proposed by some advocates to be a means for significantly reducing health care expenditures. It is argued that such a system eliminates excessive administrative cost and makes consumers more price conscious when it comes to medical services. Medical savings accounts are also a major component of the Singapore health care system. And medical savings accounts have been introduced into some provinces in China who intends to expand them into other provincial areas in China. The nation of Singapore spends more than six times less per capita than Americans do for health care yet they have a lower infant mortality and a longevity for its citizens higher than in the US and most other nations.
However, medical savings accounts (Medisave) are only one component of the Singapore health care system which also consist of catastrophic national health insurance, subsidies for public hospitals, and required out of pocket cost for consumers, and some government . Thus it has been argued that the Singapore system would be rather difficult to replicate in other countries. But what Singapore does tell us that it is possible to dramatically reduce health care expenditures with the proper subsidies and incentives. And if the US had a health care system as efficient as the one in Singapore, America could reduce its private and public health care expenditures by a whopping $1.9 trillion annually!