So we know that the US pays way too much for healthcare, and we all have ideas about how to fix it. This is a post about the distribution of that healthcare spending. Are we spending too much on inpatient care? Outpatient care? Maybe it's all about administration and paperwork, and if we just cut out the middlemen we could slice out the extra costs. Maybe we're too damn fat, or we practice defensive medicine more than other countries. Maybe we coddle doctors and pay them too much. McKinsey and Company have broken down US spending into these (and more) categories. Here are two key pictures: You'd expect the US to be on the line, if we were spending in the same way that other countries are. Above the line means you're spending more than we'd expect, below the line that you're spending less than we'd expect, for your national income. Let's break this down a bit. 0. "Remaining health care spending" in the graph (the biggest portion) is just the amount we would be spending if we were on the line. 1. The US pays about 50% more than it would be expected to. Specifically, we're paying $7000 per person, but based on our wealth and the average payment across other countries, we ought to be spending closer to $5000. 2. The largest single area of "overspending" is in outpatient care. 3. None of the red herrings matter a whole lot. We pay doctors more, and that leads to increased costs, but not by much. 4. We actually overspend by a ton on administration and insurance, but those are relatively small pieces of a much bigger picture. Cutting admin expenditures in half wouldn't do much to that big picture. This basically maps out a landscape of where reform needs to happen. Outpatient care is extremely expensive in the US, and reforming outpatient care would be a massive step in the right direction. We spend a bit more than we should on drugs, and on administration. We can't really blame being fatter than other countries, or paying doctors more, except perhaps in combination. So many pretty charts about the healthcare spending situation. "higher than expected", specifically, means higher than one would expect a country with our income level to spend, using the OECD countries to figure out the relationship between wealth and health care spending.