In light of trumps announcement of the prescription drug deal today, it’s worth to take a look at the real picture of the US 🇺🇸healthcare spending.

In 2023, U.S. healthcare spending totaled $4.9 trillion, according to the Centers for Medicare and Medicaid Services (CMS). Prescription Drug Costs

Retail prescription drug spending accounted for smallest percentage of healthcare spending 9.2% of total health spending, or roughly $449.7 billion, in 2023. This figure excludes physician-administered drugs, which are often included in hospital or outpatient spending. Some analyses suggest prescription drugs, including both retail and physician-administered, could account for up to 10-12% of total spending when broader categories are considered.(https://www.healthsystemtracker.org/chart-collection/u-s-spending-healthcare-changed-time (https://www.cms.gov/data-research/statistics-trends-and-reports/national-health-expenditure-data/nhe-fact-sheet

Administrative Costs

Artificiallly lower Partial reported administrative costs numbers are usually presented at Approximately 7.4% of total national health expenditures, or about $362.6 billion in 2023. This includes costs for administering private insurance plans and public coverage programs but excludes administrative costs borne by healthcare providers but distributed to consumer total administrative costs (including provider-side expenses) estimated to double of presented numbers ranging from 15% to 30% of healthcare spending ($735 billion to $1.47 trillion!), with a significant portion almost 1 trillion wasted due to inefficiencies in billing, insurance management, and prior authorization processes.

A 2022 Health Affairs study estimated on lower end wasteful administrative spending at $285 billion to $570 billion annually.(https://www.healthsystemtracker.org/chart-collection/u-s-spending-healthcare-changed-time https://www.healthaffairs.org/content/briefs/role-administrative-waste-excess-us-health-spending

The ELEPHANT 🐘 in the room

The largest portion ~83.4% of healthcare spending, or approximately $4.09 trillion, NOT touched by trump administration making a lot of noise announcing yet to be seen in practice prescriptions costs reductions, covers primarily hospital care (31.2%, ~$1.53 trillion), physician and clinical services (20.1%, ~$985 billion), and other personal healthcare costs like nursing care, dental services, and home health care. These costs are driven by factors such as labor shortages, medical equipment, and facility operations that can in THEORY be addressed by AGI but likely to increase costs at least over decade. Inpatient and outpatient care alone account for a significant portion, with the U.S. spending $4,531 per capita more on these services compared to peer nations, representing nearly 80% of the spending gap.

50-90% of clinical, physician &hospital care costs ARE de facto additional hidden ADMINISTRATIVE HMO & insurance profits/costs not seen by physicians themselves as reported by physicians.

Summary

In 2023, administrative costs were roughly 7.4% (potentially up to 15-30% with broader definitions), prescription drugs about 9.2%, and other costs (mainly hospital and physician services) around 83.4%. The high administrative burden and rising drug costs are notable drivers, but hospital and physician services used by HMO & government and private insurance to add hidden administrative costs dominate overall spending. Comparisons to peer nations suggest U.S. administrative and drug costs are disproportionately high, with administrative spending per capita ($925) and prescription drug spending ($1,635) far exceeding averages in comparable countries ($245 and $944, respectively)

An easy $1-2 trillion in administrative& hospital services costs savings via cuts of administrative waste and hidden fraud in the age of claimed AGI is nowhere to be mentioned or addressed by the White House.