The United States has one of the most expensive health care systems in the world. For every dollar spent, the U.S. spends closer to 17 cents on health care, compared to other high-income nations, which spend around 11 cents on health care.

With such high health care spending, one might hope that Americans live longer lives. Unfortunately, this is not true. Despite high health spending, we live shorter lives. Life expectancy is lower than peer nations. Even pre-COVID, life expectancy had been declining. Life expectancy declines only happen where there is a major emergency — such as the HIV epidemic in Africa or the Soviet Union collapse.

What about Hawaii? We spend less per person on health care, yet have a longer life expectancy compared to the national. Pre-pandemic, health care spending in Hawaii was growing rapidly. If GDP generally grows at the rate of 2% per year, Hawaii has exceeded that. According to the U.S. Centers for Medicare and Medicaid Services, Hawaii growth nearly tripled, at the rate of nearly 6%. Health care cost growth rate is a critical barometer not only for our health care system, but our overall economy.

So why the growth? Health economists have studied this ad nauseum, including growing incomes, aging population and new drugs. As renowned Princeton professor Uwe Reinhardt once said, “It’s the prices, stupid.” Prices for drugs, hospitals, physicians, etc., have grown in excess of GDP growth rates.

So who regulates health care cost growth in the U.S.? It depends. The U.S. does not regulate drug prices, unlike all other high-income nations. Medicare, the flagship entitlement for seniors and those with disabilities, does not negotiate drug prices with pharmaceutical companies. Some of these multinational pharmaceutical corporations have revenues larger than the state of Hawaii’s budget. Not surprisingly, of all industries, the health care industry spends among the most for federal lobbying— with spending highest for pharmaceutical and health product lobbying.

For hospitals and insurance, however, states have regulatory authority, but most states don’t use it. Hawaii has an obscure agency called the State Health Planning and Development Agency, the only state agency with the authority to collect health care cost data from plans and hospitals. In 2020 there was an attempt to gut SHPDA and eliminate its staff positions, but fortunately, it was not approved legislatively.

Some states with strong capacity have innovated mechanisms to control health care cost growth. Massachusetts, for example, has a Health Policy Commission (HPC), akin to a sister agency to SHPDA. But if SHPDA is the sister that’s being slowly emaciated to death, then HPC is the healthy and strong sister. HPC collects detailed hospital cost data and regulates cost growth for individual health care facilities if they exceed a chosen benchmark growth rate each year.

Health care cost growth initiatives, such as these by HPC, are very promising. The Peterson- Milbank Program on Sustainable Health Care Costs has currently six states involved in related health care cost benchmarking efforts. Although there are other, more effective ways to control health care costs — such as single payer — health care benchmarking is a second-best alternative.

Authority to regulate health care cost need not reside in SHPDA; some states put it in the state insurance commissioner’s office. But the attempt to quietly gut SHPDA does not bode well for health care cost control and for Hawaii residents. Considering the $1 billion in investments recently announced by The Queen’s Health Systems, we should ask who will foot the bill and how much our health care bill will be growing. SHPDA could be a healthy protector to watch whether costs are growing rapidly.

Every dollar spent on health care is a dollar less that we could have spent on something else, such as education, infrastructure, or a productive sector such as technology, innovation or entrepreneurship that generates multiplier economic gains. It is our duty as citizens to ask inconvenient questions and examine whether the government is serving the interests of the public, and not only that of private industry.

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For more health-data research, see the Pacific Health Analytics Collaborative, www.hawaii.edu/aging/phac.

Victoria Fan is the interim director and associate professor at the Center on Aging at the University of Hawaii.