New Report on Understanding U.S. Health Care Spending

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News Type: 

News Article

June 28, 2011

Issue Areas: 

CostEconomic ImpactsInnovationTrends

A new Data Brief from the National Institute for Health Care Management (NIHCM) Foundation for July 2011, reports that total national health spending rose 23 percent in 2005 and 2009, from $2.021 trillion to $2.486 trillion respectively. 

The report also found that higher spending could be attributed to hospital care and physician and clinical services. These accounted for half of the increase in total national health spending between 2005 and 2009, as well as 80 percent of the 15 percent increase in private insurance premiums in the same period. 

In determining the recent expenditure growth in health care costs, the report stated that rising prices per unit of service have played a larger role than rising utilization rates. They also described the key drivers of higher unit prices and higher utilization rates as follows:

  • New medical technology
  • Growing rates of obesity and other chronic disease
  • Fee-for-service payment incentives that encourage a higher volume of services and fail to promote effective coordinated management of chronic conditions
  • Growing economic prosperity
  • Expanding insurance coverage
  • Defensive medicine and more intensive use of diagnostic testing and
  • Aging population.