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Health Care Spending is Growing Faster than the Economy

U.S. health care spending has been steadily on the rise since the 1970’s, but has seen exceptional growth since 1985. This growth in health care spending exceeds growth in the economy and national income, indicating that significant excess growth exists.[1] In fact, it is estimated that health care spending has been growing at a rate of 9.9%, 2.5 percentage points faster than GDP.[2]

While health spending has generally been rising faster than economic growth throughout the world, the US has one of the highest rates of health spending growth due to the nation’s high level of health care spending per capita as well as the share of GDP devoted to health care spending.[3]

Average Annual Growth Rates for Nominal NHE and GDP in Select Time Periods

Source: “Comparing Projected Growth in Health Care Expenditures and the Economy,” Kaiser Family Foundation, May 2006, 20 June 2007 <http://www.kff.org/insurance/snapshot/chcm050206oth2.cfm>.

Data from Centers of Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at http://www.cms.hhs.gov/NationalHealthExpendData.