Question

Which of the following statements is true? (LO3) a) Expenditure on healthcare has declined considerably during the recent years. b) About one out of every six dollars of our GDP goes toward health care. c) The United States spends less per person on health care than most other developed nations. d) Health insurance premiums are an insignificant cost of doing business for most large companies.

Short answer

The true statement is: b) About one out of every six dollars of our GDP goes toward health care.

Step-by-step solution

Compare Statements to Known Trends and Data

Based on the knowledge about healthcare spending, GDP share, and health insurance premiums in the United States, analyze each of the statements and determine their truthfulness: a) Expenditure on healthcare has declined considerably during the recent years. This statement is false. Healthcare spending in the United States has been consistently increasing over the past few decades. In recent years, the rate of growth in healthcare spending may have slowed, but expenditures have not declined. b) About one out of every six dollars of our GDP goes toward health care. This statement is true. The United States spends a considerable portion of its GDP on healthcare. According to the Centers for Medicare and Medicaid Services, healthcare spending accounted for approximately 17.7% of GDP in 2019. This is roughly one out of every six dollars. c) The United States spends less per person on health care than most other developed nations. This statement is false. According to data from the Organisation for Economic Co-operation and Development (OECD), the United States spends significantly more per person on healthcare than other developed nations. In 2019, the United States' health expenditure per capita was over \(11,000, whereas the average expenditure per capita among OECD countries was around \)4,000. d) Health insurance premiums are an insignificant cost of doing business for most large companies. This statement is false. Health insurance premiums constitute a significant expense for businesses, especially for large companies that offer health benefits to their employees. According to the Kaiser Family Foundation's 2020 Employer Health Benefits Survey, the average annual premium for family coverage offered by employers was over $21,000. While premium costs are shared between employers and employees, the costs borne by employers are still significant.

Choose the Correct Statement

Based on the analysis of each statement, the true statement among the given choices is: b) About one out of every six dollars of our GDP goes toward health care.

Key concepts

GDP healthcare expenditure

Healthcare expenditure refers to the portion of a country's Gross Domestic Product (GDP) that is spent on healthcare services and products. In the United States, healthcare spending makes up a significant proportion of GDP.

• GDP is a measure of a country’s economic activity. It includes the total value of all goods and services produced over a specific time period.
• As of 2019, healthcare spending in the U.S. was approximately 17.7% of GDP. This means nearly one out of every six dollars spent in the country goes towards healthcare.
• This high percentage reflects the priority and cost associated with maintaining health systems and services.

The continuous rise in healthcare expenditure often sparks debates regarding sustainability and efficiency. Policymakers and economists frequently discuss ways to manage this substantial fiscal load while maintaining quality in healthcare services.

United States healthcare spending

The United States leads the world in healthcare spending per capita, significantly outpacing other developed nations.

• The United States spent over $11,000 per person on healthcare in 2019, according to data from the OECD. This figure is more than double the average expenditure per capita among OECD countries, which was around $4,000.
• High spending is attributed to several factors, including advanced medical technology, higher healthcare prices, and the prevalence of chronic diseases.
• Despite this considerable investment, the U.S. faces challenges such as higher rates of certain diseases and lower life expectancy compared to some other developed nations.

Efforts to curb spending focus on improving efficiency and care delivery, promoting preventive measures, and reforming healthcare policies to ensure that expenditures translate to better health outcomes.

Health insurance costs

Health insurance costs have become a significant consideration for both individuals and employers in the United States. These costs include premiums, deductibles, and out-of-pocket expenses.

• For employers, especially large companies, providing health insurance is a major expense. According to the Kaiser Family Foundation, the average annual premium for employer-sponsored family coverage in 2020 surpassed $21,000.
• Employees often share this burden, with premiums and other costs occasionally representing a substantial portion of their income.
• Rising insurance costs can impact business decisions, influence employment benefits, and affect competitiveness.

Innovations in insurance models, healthcare reforms, and strategic cost management are essential to mitigate these financial impacts while ensuring that healthcare remains accessible and effective for all.