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The history of health care spending in 7 graphs

WONKBLOG | Health care spending grew more slowly in the past two years than it has in over five decades. Even with health care costs growth slowing, the U.S. still devotes 18 percent of its economy to the sector, more than most other industrialized countries. These charts explain how that happened, what drives up health care costs and whether they’ll continue to slow in years to come.

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Back in 1970s, the United States looked a lot like other countries when it came to health care spending. In 1980, we spent $1,110 per person on health care, which worked out to about 9.2 percent of Gross Domestic Product. But in the 1980s, health-care costs in the United States began growing much faster than in other countries, rising to $8,402 per person in 2010. That amounts to a total of $2.54 billion spent on health care, or 17.9 percent of our total economy.

/ Source: Kaiser Family Foundation

In the past few years, health care costs have slowed. And, in 2010, health care costs grew at the exact same rate as the economy. Which begs the question: why, after rising for years, are health care costs now growing at the same speed as the rest of the economy?

In the past few years, health care costs have slowed. And, in 2010, health care costs grew at the exact same rate as the economy. Which begs the question: why, after rising for years, are health care costs now growing at the same speed as the rest of the economy?

/ Source: Center for Medicare and Medicaid Services

There's plenty of finger pointing when it comes to who is to blame for our rising health care costs. This data from the Congressional Budget Office suggests that new technologies account for about half of increases in health care spending. Growth in personal income has given Americans more money to spend on their health care cost. And increases in the price of goods in health care also play a role.

There's plenty of finger pointing when it comes to who is to blame for our rising health care costs. This data from the Congressional Budget Office suggests that new technologies account for about half of increases in health care spending. Growth in personal income has given Americans more money to spend on their health care cost. And increases in the price of goods in health care also play a role.

/ Source: Congressional Budget Office

Three key factors drive up health care costs. There's how much each unit of health care cost. There's population growth: the total number of people who need health care can increase. And there's utilization: The amount of health care each person uses can increase. In 2010, the cost of health care grew at about the same rate that it has for the past decade. So did the growth of the population. What's driving our slowdown in health care costs is a drop in utilization: Americans are using pretty much the same amount of health care as they did last year. That's a big change from the past decade, where we increasingly used more and more health care.

Three key factors drive up health care costs. There's how much each unit of health care cost. There's population growth: the total number of people who need health care can increase. And there's utilization: The amount of health care each person uses can increase. In 2010, the cost of health care grew at about the same rate that it has for the past decade. So did the growth of the population. What's driving our slowdown in health care costs is a drop in utilization: Americans are using pretty much the same amount of health care as they did last year. That's a big change from the past decade, where we increasingly used more and more health care.

/ Source: Center for Medicare and Medicaid Services

The slowdown in how much health care Americans consume is especially evident in our spending on doctors. Back in 2001, our spending on physicians and related clinical services was growing by over 8 percent annually. Now, it's down to growing slower than the rest of the economy, rising 2.5 percent in 2010.

The slowdown in how much health care Americans consume is especially evident in our spending on doctors. Back in 2001, our spending on physicians and related clinical services was growing by over 8 percent annually. Now, it's down to growing slower than the rest of the economy, rising 2.5 percent in 2010.

/ Source: Center for Medicare and Medicaid Services

Most health care economists attribute the slowdown of health care spending to the recession and, as a result, a drop in health insurance coverage. The percent of Americans who lack health insurance has steadily declined since 2001, hitting 16.7 percent in 2010. 2010 was also the first year in the last two decades where the number of Americans with insurance dropped, falling from 49.9 million in 2009 to 49 million in 2010.

Most health care economists attribute the slowdown of health care spending to the recession and, as a result, a drop in health insurance coverage. The percent of Americans who lack health insurance has steadily declined since 2001, hitting 16.7 percent in 2010. 2010 was also the first year in the last two decades where the number of Americans with insurance dropped, falling from 49.9 million in 2009 to 49 million in 2010.

/ Source: Center for Medicare and Medicaid Services

The current slowdown in health care spending doesn't necessarily mean that future health care costs will decelerate as well. In fact, the Center for Medicare and Medicaid Services predicts that, as the economy rebounds, Americans will begin spending more on health care costs, as they have after previous recessions. This chart comes from CMS' health spending projections this past summer. They expect the growth in health care costs to spike in 2014, as the health reform law expands Medicaid, and then return to a relatively average rate of six percent a year.

The current slowdown in health care spending doesn't necessarily mean that future health care costs will decelerate as well. In fact, the Center for Medicare and Medicaid Services predicts that, as the economy rebounds, Americans will begin spending more on health care costs, as they have after previous recessions. This chart comes from CMS' health spending projections this past summer. They expect the growth in health care costs to spike in 2014, as the health reform law expands Medicaid, and then return to a relatively average rate of six percent a year.

/ Source: Center for Medicare and Medicaid Services

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