High and Rising Health Care Costs

Demystifying U.S. Health Care Spending

The United States is spending a growing share of the GDP on health care, outpacing other industrialized countries. This synthesis examines why costs are higher in the U.S. and what is driving their growth.

Key Findings

  • Health care inefficiency, medical technology and health status (particularly obesity) are the primary drivers of rising U.S. health care costs.

  • Health payer systems that reward inefficiencies and preempt competition have impeded productivity gains in the health care sector.

  • The best evidence indicates medical technology accounts for one-half to two-thirds of spending growth. While medical malpractice insurance and defensive medicine contribute to health costs, they are not large enough factors to significantly contribute to a rise in spending.

Research is consistent that demographics will not be a significant factor in driving spending despite the aging baby boomers.