The Issue

The United States spends a larger share of its gross domestic product (GDP) on health care than any other major industrialized country. Over the past decade, increases in American health care spending have far outpaced increases in inflation and income, placing tremendous strain on employers, families and the overall economy.

Why It Matters

  • Health care expenditures in the United States surpassed $2.3 in 2008, more than three times what was spent in 1990, and over eight times more than 1980. United States spending on health care—as a percentage of GDP—is more than six percentage points higher than the average for other developed countries, but Americans are no healthier.
  • Increases in health care costs over the past two decades, coupled with an overall economic down turn and rising federal deficit in the past 10 years, place great strains on private health care financers and federal programs, such as Medicare and Medicaid.

Policy Context

One of the most hotly contested debates surrounding the Affordable Care Act (ACA) is whether the legislation will lower health care costs. Many say it will lower the federal budget deficit over the long-term, and others contend that it will inflate the deficit and national debt. As reform is implemented, it will be important to track how cost controls in the legislation, new rules for allowing purchase of health insurance across state lines and malpractice reform could affect the amount of money America spends on health care.

Health Care Costs Fast Facts

Cost of Chronic Illness

Americans are living longer, but also with chronic illnesses that limit a person's functional status, productivity, and quality of life.

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Premiums on the Rise

Health care premiums for family coverage increased 50 percent from 2003 to 2010, and the employee share of premiums saw a 63 percent bump.

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Cost & Value