Health Sector Spending

Overview

Health spending has grown faster than the economy for decades, resulting in the U.S. health care share of national economic output (gross domestic product (GDP)) increasing from about 7 percent in 1970 to near 18 percent today. This increase in health care spending poses financial challenges for individuals, families, businesses, and governments, while, at the same time, most U.S. health outcomes lag far behind international comparators. The fiscal challenges of U.S. health spending are particularly evident when viewed from federal and state government perspectives. About half of health care spending is publicly financed, mostly through Medicare and Medicaid, and the current rate of growth for these programs is not sustainable as it crowds out other priorities, such as infrastructure investments and education. A sustainable solution requires a long-term reduction in the health spending growth rate relative to GDP, while increasing access, affordability, and quality of care for all. 

Approach

To support this goal, our team of health economists and researchers track U.S. and state health spending, prices, and employment trends, utilizing the most recent data series to provide greater detail on where our health care dollars are going and what is contributing to health spending growth. We use these data and insights to conduct related research on important drivers of health care spending and how health care cost growth impacts access to and quality of care. To gain a greater understanding of state health spending, we have developed tools to incorporate information from state All-Payer Claims Databases (APCDs) to augment findings from traditional health spending and prices datasets.