Office of the Vice President for Global Communications

Wednesday, December 16, 2009

Michigan’s health care spending lower than U.S. average, growing more slowly

An issue brief on health care costs released by the Center for Healthcare Research & Transformation (CHRT) shows Michigan’s health care spending has been growing at a slower pace than the national average for more than a decade.

View the CHRT issue brief “Health Care Spending by Country, State and Payer” online

The issue brief also says Michigan spends less per capita on personal health care ($5,058) than the national average ($5,283), ranking 36th among the 50 states and District of Columbia in 2004 (the most recent year for which state-level data were available). Michigan also has one of the lowest rates of Medicaid payments to physicians in the country, ranking 44th on the 2008 Medicaid to Medicare physician fee index.

The issue brief is the first in a series of reports CHRT will release over the next several months on health care costs in the U.S. and Michigan, comprising data from multiple state and national sources. CHRT is a partnership between U-M and Blue Cross Blue Shield of Michigan to test the best ideas for improving the effectiveness and efficiency of the health care system.

“Experts on all sides of the health reform debate agree that the current rate of growth in U.S. health care spending is unsustainable and ultimately damaging to the economy,” said CHRT Director Marianne Udow-Phillips. “To enact and implement reforms that have a positive impact on health care costs, we must first understand how and where we are spending our health care dollars today.”

The report also shows:

• The U.S. spends more on health care than any other country in the world as a percentage of gross domestic product (GDP) — 33 percent more than the next highest spending nation.

• While spending through private insurance accounted for just less than 40 percent of health care spending in the U.S., in Michigan the number was more than 46 percent, reflecting Michigan’s relatively high rate of private coverage.

• Nationally, “out-of-pocket” (consumer) payments accounted for 18 percent of spending, while in Michigan – largely because of the greater contribution of private insurance – out-of-pocket payments were 14 percent.

• In Michigan and the U.S., more than one-third of personal health care spending went for care in a hospital setting, one-quarter to medical office visits, and about 20 percent to prescription drugs. Prescription drugs have been one of the fastest-growing components.

• Combined Medicaid and Medicare spending accounted for more than one in three health care dollars spent in the U.S. in 2004.