Healthcare's $363B in 'Hidden Costs' Detailed

John Commins, March 25, 2011

Consumers are spending $363 billion -- 14.7% more -- on healthcare than what is conventionally cited in government accounts when unreported costs such as unpaid supervisory care from friends and relatives are factored in, according to a study from the Deloitte Center for Health Solutions. 

This unreported spending identified in the Deloitte report, The Hidden Costs of U.S. Health Care for Consumers: A Comprehensive Analysis  falls outside of traditionally counted healthcare costs such as doctors, prescriptions, hospitals, and health insurance coverage. Those additional costs identified by Deloitte bump consumer discretionary spending on healthcare from 16.2%, for items traditionally reported by the government, to 19.9%. That makes healthcare spending the largest single household budget item, surpassing housing and utility costs at 18.8%.

“There are two important takeaways from this report,” Paul Keckley, executive director, Deloitte Center for Health Solutions, told HealthLeaders Media. “One is that we have to define healthcare more broadly than doctors, hospitals, prescription drugs, and insurance. We have to define it the way consumers define it. When they are buying an over-the-counter remedy it could be instead of going to a doctor or a hospital.”

“Second, we have to tackle this question of supervisory care, of the lost wages that people are now bearing to take care of medical problems for family members,” he said.

Fifty-five percent in the unreported costs -- $199 billion – identified by Deloitte, were for the estimated value of supervisory care, or care given by unpaid relatives and friends, almost all of which was provided to people living in lower income families. Keckley called the estimate, based on lost wages of $12.60 an hour “very conservative.” The $199 billion also does not reflect the loss of sales and income taxes that would have otherwise been paid, he said.

John Commins

John Commins is a senior editor at HealthLeaders Media.

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