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Trends, Costs  in Healthcare

High and Rising Health Care Costs

Demystifying U.S. Health Care Spending, Robert Johson Foundation, April, 2008

Concern about high and rising health care costs in the United States has increased sharply in recent years. With the increase in costs and the lack of affordability of health insurance for many Americans, health policy experts are discussing whether steps can be taken to expand insurance coverage while keeping costs down.

Key Findings: 

Health insurance is becoming increasingly difficult for workers—and their employers—to afford.

Premiums increased 114 percent between 1999 and 2007, while workers’ earnings increased only 27 percent.

U.S. spending on health care—as a percentage of Gross Domestic Product—is more than six percentage points higher than the average for other developed countries.

Technology—not demographics or medical malpractice—is the key driver of health spending, accounting for an estimated half to two-thirds of spending growth.

Other important drivers of health care spending include health status (particularly obesity) and low productivity gains in the health care sector.