What is Health Growth?
In 2001, health care spending grew by 10% per person, the first double-digit increase in more than a decade.1 Experts on national health care costs are forecasting 7% to 9% annual growth in health insurance premiums for the next decade. Across the nation, states are struggling to understand what is behind escalating health care costs and how best to contain them. This chapter examines the major cost drivers in the health care system, how they are changing.
What Are the Impacts of the Growth in Health Care Costs?
Health care spending comprises 14% of U.S. Gross Domestic Product (GDP). For the past forty years, health care spending has become a larger and larger proportion of the U.S. Gross Domestic Product (GDP; see Figure 1). In 1960, the U.S. spent 5% of its GDP on health care. As of 2000, that proportion had grown to 14%, or nearly three times what it was forty years ago.
This growth rate marks a profound change in the role health care plays in Americans' lives. The good news about this shift is that it reflects the marked advances
in health technologies that allow more people to live longer, healthier lives. On the other hand, rising costs for health services mean that our society must sacrifice
an increasingly greater share of other goods and services in order to pay for health care.