Spending by private and public payers have both increased. In several of the facts that follow, we describe these factors and how they are shaping health care. Rent-seeking, monopoly power, and other flaws in health-care markets sometimes result in unnecessary care or in elevated health-care prices. Finally, if productivity advancements are more rapid in tradable goods like agriculture or manufacturing than in services like health care or education, the latter will tend to rise in relative price and as a share of GDP.īut some of the increase in health-care costs is undesirable (Cutler 2018). In addition, as the population ages, health deteriorates and health-care spending naturally rises. Countries with a higher level of output per capita tend to have a higher level of health expenditures per capita (Sawyer and Cox 2018). Some of these changes are desirable: As a country gets richer, spending a higher share of income on health may be optimal (Hall and Jones 2007). This growth represents a range of factors, from new health-care treatments and services to better coverage, higher utilization, and rising prices. economy, as can be seen in figure A at 17.7 percent in 2018, it was more than three times that. Sixty years ago, health care was 5 percent of the U.S. But even if expenditures as a share of GDP plateaued at their current level, they would still represent a massive expenditure of resources.

This growth has slowed at times health spending as a share of GDP was roughly flat in much of the 1990s, and growth has also slowed to some extent in recent years. Health care is growing as a share of the economy and government budgets in ways that appear unsustainable (CMS 1960–2018 Organisation for Economic Co-operation and Development 2015). The United States spends more than other countries without obtaining better health outcomes (Papanicolas, Woskie, and Jha 2018). A well-functioning health-care sector is therefore a prerequisite for a well-functioning economy.

U.s.healthcare system overview