The Price of Health: Why Americans Pay More for Less

By: Todd Perman

The current state of healthcare in the United States is complex and challenging to say the least.

With healthcare expenditures accounting for a significant share of the GDP, the burden on the economy is substantial. Recent data from KFF Peterson Health System Tracker shows that in 2021, healthcare spending amounted to $4.3 trillion, representing 18.3% of the GDP. This share is projected to rise to 19.6% by 2031. Comparatively, the U.S. spends a larger percentage of its GDP on healthcare than other developed countries. Additionally, the per capita spending on health in the U.S. far exceeds that of other nations, highlighting a critical issue of cost-effectiveness in the American healthcare system.

The distribution of medical expenditures by condition underscores some key areas where costs are concentrated. Ill-defined conditions alone accounted for 15.1% of total medical services expenditures in 2021, indicating a significant portion of spending is on conditions that lack precise diagnosis or categorization. Chronic diseases, which are the leading causes of illness, disability, and death in the United States, drive 90% of the nation's annual healthcare costs. These chronic conditions, along with mental health issues, contribute to the substantial financial burden on the healthcare system.

One of the critical implications of rising healthcare costs is the barrier it creates for patients needing medical care. In 2022, a considerable percentage of adults reported delaying or forgoing medical care due to costs, with 28% indicating they went without care for financial reasons. This issue is compounded by the high medical care Consumer Price Index for All Urban Consumers (CPI-U), which grew by 114.3% from 2000 to 2023, compared to an 80.8% increase for all goods and services. The escalating costs make it increasingly difficult for individuals to access necessary healthcare services, contributing to poorer health outcomes.

Despite the high expenditure, the U.S. lags behind other developed countries in terms of health outcomes. Life expectancy in the U.S. is notably lower than in comparable countries. In 2022, life expectancy at birth was 4-6 years lower than in other developed nations. Moreover, from 1980 to 2022, the U.S. has experienced a significant decline in life expectancy progress, losing nearly two decades of improvement. This paradox of high spending and poor outcomes raises critical questions about the efficiency and effectiveness of the U.S. healthcare system.

The overriding problem we see in healthcare is that chronic diseases are being caught too late. Catching diseases early avoids significant costs to the healthcare system and gives the best chance of avoiding catastrophic results. Accurate early detection of diseases is a critical step that needs to be infused into our healthcare system. At Seed Healthcare , our theory of change starts with detecting diseases much earlier than we do today.

So, how does Seed make a difference? We invest in proactive healthcare solutions from innovative entrepreneurs. Embrace technology, AI, and digital health solutions to streamline processes, improve patient outcomes, and reduce costs. Rely on medtech advancements for more effective treatments. Align with healthcare providers to enhance services and focus on preventive care to reduce the high costs of chronic diseases.

This scenario drives our mission to disrupt healthcare. By creating a proactive and accurate system, we can address inefficiencies, reduce costs, improve care quality, and increase accessibility – leading to healthier and longer lives.

And who doesn’t want that?

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Seed Healthcare Investment Fund