It’s a well-known fact that healthcare spending has consistently grown faster than the rest of the US economy. What’s behind this trend is less certain. Economists point to two causes: the prevalence of diseases and conditions afflicting the US population, or the rising costs of treating diseases.
New research shows it is the latter, with higher prices for treatment accounting for 70% of growth in health care spending.
“Rising costs of treatment have had a much greater impact on driving up average spending than increased disease prevalence,” said American University associate professor Martha Starr. “To tackle the problem of health care spending from a policy perspective, solutions need to focus on slowing growth of spending on procedures, treatments, and drugs used to treat given diseases and conditions. Of course, slowing or reversing the rise of chronic conditions would be beneficial for the health and well-being of the US population, but by itself it won’t put much of a dent in health care spending growth.”
