Study Reveals $600 billion in “Hidden” Health Care Costs

Health care spending in the United States exceeded the total reported in the National Health Expenditure Accounts (NHEA) in 2010 by $3.2 trillion, according to a report from the Deloitte Center for Health Solutions. 

A value that is 23.9% higher than what was reported by NHEA, the additional increase bears Deloitte’s report’s title, “The Hidden Costs of U.S. Health Care.” These “hidden costs” can be attributed to an additional $621 billion in direct and indirect costs and consist of alternative medicines, functional foods and the costs associated with supervisory care. 

Of this $621 billion, $492 billion—or 79%—consisted of supervisory care, which Deloitte defines as contribution made by family members and community caregivers caring for individuals with chronic health problems or disabilities at home. This often replaces care that might have otherwise been performed by paid professionals such as nurses or home health care workers.

The total discretionary costs for health care, the report notes, totaled $2,898 per capita in 2010. Of this figure, $969 accounted for NHEA categories, while $1,929 represented categories additional to the NHEA. 

Of note in the report was the portion of health care services that were out-of-pocket (OOP). 

Professional care services accounted for 24% of OOP spending among consumers, while long-term care ranked in at 10% and hospital care at just 4% of OOP.

What was even more interesting was the impact of health care spending on seniors and low-income groups. Health care costs for seniors age 65 and older dominated health care spending in 2010, comprising 37% of total expenditures, or $1.19 trillion.  

Baby boomers’ ranked next in health care spending, accounting for 27%, or $860 billion in 2010.

At $440 billion, or 37% of total spending, seniors ranked highest among direct and indirect OOP spending. Boomers were down the line, accounting for 21% at $179 billion. 

Since demand is high among seniors for supervisory care, Deloitte anticipates the need for supervisory care to rise as the population ages. 

Among the considerations in addressing these “hidden costs,” policymakers should be sensitive in observing the consequences of direct and indirect costs, along with paying attention to models and policies that support supervisory care for low-income households. 

Since 32% of health care spending is paid OOP and falls to low-income groups, understanding trends in consumers’ spending for health care services could provide insights for opportunities of investment and innovation for stakeholders, Deloitte suggests. 

Written by Jason Oliva

Jason Oliva

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