Statistical data for the USA at regional (State) level reveal just how skewed is the
distribution of that element of public expenditure covered by State and Federal
allocations. It should be noted that about half of US public expenditure on health is
explained as follows:
‘The system of employer-sponsored coverage emerged to restrain wage
inflation during World War 2 and afterward continued when the federal courts
ruled that unions could collectively bargain with employers for benefits,
including health care coverage. These benefits are considered public sector
‘tax expenditures’ because they are excluded from workers’ wages for
purposes of taxation and defined as an untaxed cost of business for employers’
(Milbank Memorial Fund, 2000)
Private spending occurs through private insurance taken out by individuals on top of
whatever workplace-related benefits they receive. Since the 1980s there has been a
growth in share of the former and a shift from ‘fee-for-service’ indemnity towards
‘managed care’ in insurance health plans. Health insurance has thus become more
commoditised, suppliers are keen to raise efficiencies in treatment times, use of new
technologies, and to reduce casual conduct by physicians of clinical research on
patients. Companies and consumers are equally keen to achieve value for money
under circumstances where information to enable assessment is at a premium. There
has thus been a tendency for geographical concentration of exploration research and,
due to insurance industry pressure, clinical research in specific General Clinical
Research Centres. For comparable reasons under a differently funded health insurance
system in the UK the same kind of concentration into Clinical Research Centres is
occurring (Cooke, 2002b).
In Table 2 some illustrative data are presented regarding the regional vis à vis Federal
public expenditure profile for direct health costs, excluding the employers’ ‘public
tax’ expenditures. Of particular note are the data pointing to California and New York
States accessing 11% and 12% respectively of the US total for this item. These are, of
course, large population centres, California being the larger, though it is noticeable
also that while New York spends 3.9% of its GDP in this way, California only spends
2.1%. Thus demographics, politics and per capita income also play their part in
explaining differences in level of expenditure. Among other large health expenditure
States, but not in the same rank as California and New York, are Texas and
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