Health Care Industry Market Research

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Health Care OVERVIEW

Health Expenditures and Services in the U.S.:
The health care market in the U.S. during 2024 was projected to include massive spending in the major categories of hospital care ($1,559 billion); dental services ($185.2 billion), physician and clinical services ($1,006 billion); and prescription drugs ($463 billion), along with nursing home ($216 billion) and home health care ($154 billion).  Registered U.S. hospitals totaled 6,120 properties in 2024, according to an American Hospital Association survey, containing 916,752 beds. 
Medicare, the U.S. federal government’s health care program for Americans 65 years or older, provided coverage to an estimated 66.6 million seniors during 2023.  National expenditures on Medicare for fiscal 2024 were projected to be $1,086 billion, including premiums paid by beneficiaries and health care costs covered by Medicare.  By 2034, the number of people covered by Medicare will balloon to more than 80 million due to the massive number of Americans who will become of eligible age.
The CMS estimates Health spending in the U.S., at about 17.7% of Gross Domestic Product (GDP) in 2024.  Health care spending in America accounts for a larger share of GDP than in any other country, by a wide margin.  Despite the incredible investment America continues to make in health care, 8% of people in the U.S. (26.4 million) lacked health care coverage for at some point in 2023.  For some, insurance was unavailable or unaffordable.  In other cases, the lack of insurance was due to a personal decision not to pay for it.  According to the Kaiser Family Foundation, most uninsured people are in low-income working families, but a large segment of those counted among America’s uninsured are non-U.S. citizens, both lawful and illegal residents.
In March 2010, President Obama signed the Patient Protection and Affordable Care Act (ACA), designed to strengthen insurance company regulation and provide medical coverage to millions of uninsured Americans.  Online health care insurance “exchanges” began enabling consumers to shop for health coverage.  Consumers whose annual incomes do not exceed set amounts may receive federal financial assistance if they purchase their own health insurance.
 
Health Expenditures Globally and in OECD Developed Nations:
A comprehensive study published by the Organization for Economic Cooperation & Development (OECD) covering more than 30 nations, including the majority of the world’s most developed economies (but excluding Brazil, Russia, India or China), found stark contrasts between health costs in the United States and those of other nations.  While health care spending in the U.S. tops 17% of GDP, in many other well-developed nations the ratio to GDP is more like 9%.  In less-developed nations, the ratio is much smaller.
Total health care expenditures around the world are difficult to determine.  However, $12.2 trillion would be a reasonable estimate for the formal, global health care market for 2024.  That would place health care at roughly 12.6% of global GDP and about $1,612 in health spending per person on average.  In the U.S. and other developed nations, the per capita number is much higher.  Plunkett Research estimates $14,849 per capita for the U.S. for 2024.  The trend over the near future is for the modest amount now spent on health care in emerging nations to rise dramatically, while OECD nations like America will struggle to contain their own mountainous costs.  Globally, Plunkett Research estimates the total prescription drug market was $1.5 trillion in 2024.
Health Care Costs in the U.S.
Particularly in the U.S., continuous increases in the cost of health care, growing at rates far exceeding the rate of inflation in general, have been inflicting financial pain on health consumers and payers of all types.  Government agencies are strained by the ever-growing cost of public health care programs such as Medicare, while employers are hit hard by vast increases in the cost of providing coverage to employees and retirees.
Many major employers are utilizing unique new programs in efforts to reduce employee illness, and thereby cut costs.  For example, the use of preventive care programs is growing, as is the use of employee education aimed at better managing the effects of diseases such as diabetes.  Some very large employers are even hiring in-house physicians and nurses or contracting with outside providers for on-premises care facilities, to offer primary and preventive care in the workplace.
Patients and insurance companies are also dealing with sticker shock over the nation’s prescription drug costs.  Other factors edging costs upward include expensive new medical technologies and patients’ demands for greater flexibility in choosing doctors and specialists at their own discretion.  At the same time, hospitals and health systems write off massive amounts of potential revenues to bad debt, which increases costs for bill-paying patients.
In the wake of the tremendous growth of all aspects of the health care industry from the end of World War II onward, efficiency, competition, price transparency and productivity were, regretfully, largely overlooked.  Much of this occurred because employers, plus federal and state governments, pay such a large portion of the health care bill, to the extent that patients were generally not sensitive to health care costs.
The Centers for Disease Control and Prevention (CDC) reported recently that six in ten Americans suffer with at least one chronic disease such as cancer, diabetes, heart disease, pulmonary conditions, stroke or hypertension.  In addition to the massive cost of health care for these patients, the lost time at work and lost economic output due to these illnesses substantially reduced the nation’s GDP.  These burdens could be vastly reduced through better consumer health practices and better preventive medicine.  For example, obesity, lack of exercise and cigarette smoking are immense contributors to these diseases.

The American health care industry faces more challenges than ever, due to many significant factors:
=         One of the most dramatic results of the Affordable Care act of 2010 has been consolidation within the hospital industry, with mergers creating massive organizations that in many cases have a dominant, regional or city-wide market share.  A similar effect has been a migration of physicians leaving private practice or small clinics in order to join giant physician practice groups or the staffs of hospitals.  Independent physicians are concerned about their ability to meet increased regulatory scrutiny, successfully deploy electronic health records and earn the incomes that they desire.  Many older physicians state that they will simply retire earlier than they had planned.
=         The U.S. population is aging rapidly.  At the same time, the life expectancy of seniors is extending.  Senior citizens will place a significant strain on the health care system in coming years.  America’s millions of surviving Baby Boomers began turning 65 in 2011.
=         The future obligations of Medicare and Medicaid are enough to cause vast problems for federal and state budgets for decades to come.  The number of seniors covered by Medicare will continue to grow at an exceedingly high rate, from 47.4 million people in 2010 to 77  million in 2030.
=         Likewise, costs for Medicaid, which is administered at the state level, have grown so rapidly that they are competing fiercely for budget dollars that might otherwise go to education and other vital state-provided services.
=         High, and growing, pharmaceutical costs have created a large backlash among health consumers and payers.  Some of the newest cancer drugs cost more than $500,000 to cover one treatment period.
=         We are now in what will long be remembered as the beginning of the Biotech Era.  Breakthroughs in research for targeted drug therapies, immunotherapies, genetic testing and synthetic biology are occurring at a rapid pace, and highly advanced, genetically engineered drugs are available for many diseases.
=         Due to rising costs, employers large and small are straining under the financial burden of health care coverage expenses for current employees and retirees.
=         Physicians, hospitals, medical device makers and pharmaceutical manufacturers face daunting pressure from litigation and claims regarding malpractice.  Lawsuit reform legislation has recently been enacted in many states with very promising results.
=         Vast numbers of Americans fail to lead healthy lifestyles that would prevent disease and cut both the amount and the cost of medical care.  Obesity-related illnesses are adding an immense amount to the nation’s health care costs.  (The recently launched obesity drugs, such as Ozempic and Mounjaro, while relatively expensive themselves (about $1,000 monthly) could eventually lead to a dramatic reduction in obesity-related chronic diseases, and thus an overall reduction in the costs of treatment and care.)
=         The three biggest causes of death in the U.S. are heart disease, cancer and stroke.  Nearly one-fourth of America’s annual health expenditures go for treatment of these three killers.
=         Only a relatively modest amount of money is spent on preventive medicine and health education.  The vast majority of health care funds are spent on the treatment of chronic diseases as well as end-of-life care for dying patients.
Source: Plunkett Research, Ltd.
 

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This industry onlyPublication date: Oct 2024
ISBN-13: 978-1-64788-544-1
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