High and rising health care costs

Abstract

The U.S. 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 include: 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.