How Much Do Consumers Pay to Healthcare Providers?

Just Facts Daily posed a question to readers regarding healthcare payments. Here is the question and answer:

What portion of all healthcare spending in the U.S. is directly paid by consumers to healthcare providers (i.e., not indirectly paid through middlemen like insurance companies or governments)?

Less than 25%

In 2009, consumers directly paid for 12% of all healthcare spending in the U.S., as compared to 48% in 1960. This trend has been driven by government policies and is a major factor in the rise of healthcare spending, because it reduces consumers’ incentive to shop for the best value.

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2 Comments

  1. You say the low percentage of consumers paying for their own healthcare: “is a major factor in the rise of healthcare spending, because it reduces consumers’ incentive to shop for the best value.” I think von Mises or Hayek would have focused on the supply side where innovations occur — the unknowns that don’t fit into computer models. Consumers may shop, but they don’t innovate. It’s the response to consumer shopping that produces innovations and product improvements, including lower prices, and it is the change in supplier incentives away from supplying third-party payers that produces both better health care and lower cost..

    It’s too bad we are not taught that in EC101. For more see:
    Hayek: Competition as a Discovery Procedure
    http://mises.org/library/competition-discovery-procedure-0
    and
    Klein: Discovery and Economic Freedom
    http://fee.org/freeman/detail/discovery-and-economic-freedom#axzz2QUxTMbaX

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