“U.S. health care spending in 2024 was $977 billion lower than the government projected it would be back in 2010. The authors attribute some of the gap between the projections and reality to technological innovations that have lowered the costs and improved the effectiveness of certain treatments,” notes The Doomslayer.
Medicaid spending has risen faster than projected back in 2010, as more people ended up on Medicaid than projected (Obamacare has cost taxpayers more than its architects predicted). But private healthcare spending — and overall healthcare spending — have risen less than projected back in 2010, due to innovations that cut costs.
The Brookings Institution explains:
The growth of health care spending in the United States seems to have permanently slowed thanks in part to technological advances making medical treatments cheaper and more effective, according to a paper discussed at the Brookings Papers on Economic Activity (BPEA) conference on March 27.
The United States spent more than $5 trillion on medical care in 2024, or 18% of its gross domestic product (GDP). That’s up a bit from 17.2% of GDP in 2010, but far below the 21.2% share of GDP—nearly $1 trillion less—forecast by government actuaries in 2010….
Examples of cost-saving technological change include a shift to outpatient surgery from inpatient surgery and the wider diffusion of drugs that prevent costly illnesses, such as statins to reduce cholesterol.
Some medical procedures (like cosmetic procedures) have gotten cheaper over time, because they are not covered by government healthcare programs — so patients shop around for the best deal, and doctors compete based on price, cutting prices and doing things to cut costs and prices. Hospital and medical costs paid for by the government have gotten more expensive in comparison, because patients have less incentive to shop around or look for the best deal if they are not paying for a medical procedure themselves.
Obesity costs our healthcare system a lot, especially on Medicaid. America is one of the ten fattest countries in the world, but it has stopped getting fatter, due to weight loss drugs. ““Gallup polling finds that self-reported obesity in the US has been falling since 2022, an encouraging finding that is broadly consistent with CDC data showing a small recent dip in measured obesity rates.”
The weight-loss drug Ozempic may be helpful not just in fighting obesity and diabetes, but also in slowing the effects of Alzheimer’s disease.
Airlines are expected to save a large amount of money on fuel if passengers slim down.
Expanding government involvement in healthcare worsened the budget deficit and increased the national debt. Obamacare supporters claimed that by “nationalizing the student lending industry…Obamacare would raise $58 billion in revenue over a decade,” noted the Washington Examiner. But it didn’t. Student loans had become a money-loser, even before Biden delayed student loan repayments at taxpayer expense. As Ben Johnson of the Acton Institute noted in 2022, a “Government Accountability Office (GAO) report released in July found the Department of Education predicted that student loans would generate $114 billion for the federal government; they instead lost $197 billion — a $311 billion error, mostly due to incorrect analysis.”
