Health Scare 2: the Money Sandwich
What is this?
It's a sankey plot representing the tangled mess of several departments and services and programs all basically trying to solve the same problem: paying for health care.
Last month I stumbled on this blog which described it as an eldritch horror. They cited their source, the National Health Expenditure Data, but they either used a very different table than the one I found, or made some significant editorial decisions about how the money flows through the various services.
I used table 19 from this pdf (the first and only link in the downloads section of the National Health Expenditure Data page). The leftmost column lists various revenue sources and how they are grouped, and the categories across the top are where the money goes. I transcribed all of that into this json, which fuels the sankey plot.
The editorial decision I made was to have everything flow from and to people. Those nodes on either end are super hand-wavey, but I figure the money ultimately comes from people and goes back to (other, likely wealthier) people.
How has health coverage changed over time?
After creating that json file, I found an excel sheet on the Historical page with even more data, back to 1960. Here is how some of the larger programs change over time.
Same as above, but normalized to 100%.
Where does the money go?
Here are the top 5 health coverage expenses. The total for the year 1960, is about $18.6B. If you plug that into an inflation calculator it'll return $204.3B, which as you can see is way less than the $3.5T total for 2023, meaning coverage expenses have increased by over 17 times the rate of inflation. I'm not an expert, but I would call that bad.
What contributes to net cost?
Here's how coverage programs contribute to the net cost of coverage. The net cost is a bunch of things, but basically the cost to administer a program plus profit.
What's the most efficient program?
This compares what percent of each coverage program goes toward net cost. Depending on which side of the transaction you're on, these bars represent either efficiency or inefficiency.
By comparing the percent that goes toward net cost, it's possible to estimate how much money would be saved if private health insurance was as efficient as Medicare (assuming we want to minimize net cost).
Currently 10.3% of private health insurance goes to net cost, which is $150.9B. Compare that to 5.8%, which would be $84.9B.
So, a difference of $66B split across 180 million people?
$366 per person per year.
Disclaimer
I'm way outside my wheelhouse here, just having fun making plots. All the data in these plots come from the US government, and their methods are somewhat opaque. So use your best judgement.