With the CPI showing only 1.9% year over year inflation in medical costs, it’s easy to forget about the extremely high costs Americans pay if you are an economist only looking at the government inflation metrics. If you speak with most Americans, they will laugh at the idea that medical costs have only gone up in the low single digits. Each case is different, but the overall numbers show America spends the most per capita and the most as a percent of GDP on healthcare. When it’s already 17.2% of GDP, any growth above GDP gets it closer to encompassing the entire economy.

What Is America Getting?

It’s very difficult to determine what America is getting for all this spending. America subsidizes global healthcare by being the leader in innovation and spending, but at the same time costs can rise too much and benefits too little to make this scenario a fair deal.

As you can see from the Haver Analytics chart below, the average American’s life expectancy has declined in the past few years. 

Source: Haver Analytics

Keep in mind, this isn’t all about healthcare.For example, if self driving cars or at least driver assist platforms develop further, auto deaths could be mostly eliminated which would raise the average life expectancy. So many factors go into this chart, such as a clean environment, mental health, and natural disasters.

One new factor which hurts life expectancy is sedentary life styles. The advancement of technology has made it so that fewer people need to do physical labor. It’s debatable if this decline in life expectancy is bad because it’s a trade off. Jobs that require mental skills can be more fulfilling and enhance human progress. Jobs that require physical activity can also be more dangerous, but that’s already in this data set.

One thesis is that the increase in life expectancy in prior decades was ‘low hanging fruit’, which means it was easier to increase the average lifespan from 55 to 60 than 70 to 75. The decline in infant mortality helped increase the average lifespan. Even though America spends the most on healthcare, its infant mortality results aren’t great. America is 32nd out of 35 OECD countries in infant mortality. America has 5.8 deaths per 1,000 births and Slovenia, which has the lowest death rate, has 1.6. Mexico has the highest as it is 12.5.