HEALTH CARE COSTS: A PRimER - The Henry J. Kaiser Family ...

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How Much Does the U.S. Spend on Health and How Has It Changed? The U.S. spent $8,402 per person on health care in 2010. Health care spending has consumed an increasing share of economic activity over time. The United States spent $2.6 trillion on health care in 2010. Spread over the population, this amounts to $8,402 per person (Figure 1). This $2.6 trillion represents 17.9% of the nation’s total economic activity, referred to as the gross domestic product, or GDP. While health care expenditures have grown rapidly over time, increases have moderated in recent years. Health care grows faster than many other sectors of the economy and thus its share of economic activity has increased over time. For example, whereas the education, transportation, and agriculture industries may, on average and over time, grow at rates close to the economy as a whole, health care does not. In 1970, total health care spending was about $75 billion, or only $356 per person (Figure 1). In less than 40 years these costs have grown to $2.6 trillion, or $8,402 per person. As a result, the share of economic activity devoted to health care grew from 7.2% in 1970 to 17.9% in 2010, though this level was unchanged from 2009. By the year 2020, the Centers for Medicare and Medicaid Services (CMS) projects that health spending will be nearly one-fifth of GDP (19.8). 4 Figure 1: National Health Expenditures per Capita, 1960-2010 NHE as a Share of GDP 5.2% 7.2% 9.2% 12.5% 13.8% 14.5% 15.4% 15.9% 16.0% 16.1% 16.2% 16.4% 16.8% 17.9% 17.9% Notes: According to CMS, population is the U.S. Bureau of the Census resident-based population, less armed forces overseas. Source: Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; NHE summary including share of GDP, CY 1960-2010; file nhegdp10.zip). 4 THE HENRY J. KAISER FAMILY FOUNDATION
Health care spending has exceeded economic growth in every recent decade. Over the last four decades, the average growth in health spending has exceeded the growth of the economy as a whole by between 1.1 and 3.0 percentage points (Figure 2). Since 1970, health care spending per capita has grown at an average annual rate of 8.2% or 2.4 percentage points faster than nominal GDP. The persistence of this trend suggests systematic differences between health care and other economic sectors where growth rates are typically more in line with the overall economy. A smaller difference is projected over the 2011 to 2020 period, where the average annual growth in per capita health spending (5.3%) is projected to be about 1.2 percentage points higher than the growth in GDP (3.9%). 5 The average annual growth rates in per capita national health spending have declined over the decades, from 11.8% in the 1970s to 5.6% in the 2000 to 2010 period. Figure 2: Average Annual Growth Rates for NHE and GDP, Per Capita, for Selected Time Periods HEALTH CARE COSTS: KEY INFORMATION ON HEALTH CARE COSTS AND THEIR IMPACT Projected Source: Historical data from Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, January 2012, at http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; NHE summary including share of GDP, CY 1960-2010; file nhegdp10.zip). Projections from Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, July 2011, “National Health Expenditures 2010-2020,” Table 1, https://www.cms.gov/NationalHealthExpendData/downloads/proj2010.pdf. 5
Page 1: HEALTH CARE COSTS A PRimER mAy 2012
Page 5: TABLE OF CONTENTS Introduction ....
Page 8 and 9: The ACA also has a number of provis
Page 12 and 13: After years of increases, the rate
Page 14 and 15: How Does Health Care Spending Vary
Page 16 and 17: What Do Health Expenditures Pay For
Page 18 and 19: Figure 9: Percent Distribution of N
Page 20 and 21: Figure 11: Cumulative Percent Chang
Page 22 and 23: Figure 13 provides detail about the
Page 24 and 25: Health insurance premium increases
Page 26 and 27: Employer shares of payroll going to
Page 28 and 29: care because of uncertain economic
Page 30 and 31: Eligibility standards for public pr
Page 32 and 33: Unnecessary spending in the US heal
Page 34 and 35: to make health care decisions more
Page 36 and 37: Medicare responsibilities, is requi
Page 38 and 39: Conclusion Policymakers face signif
Page 40: Costs, March 2007, http://www.kff.o

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