What’s the State of Healthcare in America in 2018?

What’s the State of Healthcare in America in 2018?
February 18 17:25 2018

Americans pay more for healthcare than people in other countries, but do we get our money’s worth? Healthcare spending accounts for 17.9% of GDP and its on pace to increase to nearly 20% by 2025.

In this clip from The Motley Fool’s Industry Focus: Healthcare, analyst Kristine Harjes and contributor Todd Campbell discuss the current state of healthcare in our country and why the sector could be ripe for disruption.

Kristine Harjes: Last night, President Trump delivered his State of the Union address, so we’re kicking off today’s show with a discussion of the weather, first, as usual, but after that, we’re going to turn to a State of the Union for U.S. healthcare. Todd, catch us up. Where do we stand?

Todd Campbell: I was thinking about how to frame the discussion, how to get us kick-started. And one of the things that jumped to mind in trying to figure out, what’s the state of the union when it comes to healthcare in 2018, is, maybe take a look through a consumers’ lens at the situation. And that made me think of a book by a guy named Phil Barden, he wrote a book called Decoded: The Science Behind Why We Buy. And in that book, he said that we base our decisions on the perceived value that we get from purchasing something. He defined that as the outcome that we get minus the cost to get that outcome. If you’ll bear with me for a second, Kristine, I have a slightly imperfect analogy that maybe will help us frame the conversation.

Harjes: OK, let’s hear it.

Campbell: Last week, my very high-mileage Volvo broke down. And I’m not going to buy a new car. I want to keep this car. So I was faced with three choices: I could go to the dealer and pay a premium price and get a premium part that theoretically would last me forever, or I could go to my local independent shop and I could get a fair price for a quality product; or, I could go the cut-rate route and have somebody throw in a used part that could last a day or three years. Now, I chose option No. 2 because, for my situation, that was my best perceived value, the outcome minus the cost associated with it. And I started thinking, how do you extrapolate that out to the current situation of healthcare in 2018 in the United States? And I couldn’t help but wonder if we’re paying a dealership premium, but not quite getting a dealership quality premium part for it.

Harjes: At least if you look at it relative to the rest of the world, that kind of seems like it’s the case. The United States pays so much on healthcare costs, more than any other developed nation. Our spend on healthcare is 17.9% of our GDP, according to the CMS [Centers for Medicare and Medicaid Services]. But when you compare that to other developed countries around the world, that’s usually around 10% of GDP, so we’re almost double relative to the size of our economy. Meanwhile, the quality, as you alluded to, Todd — that’s a really important part of this because many people would be happy to pay an exorbitant amount for the best quality — we don’t really have the greatest quality of care. With an average lifespan of 80 years, the United States is ranked 43rd in the world on that metric. And on many other measures as well, we don’t quite stack up in terms of outcomes…

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