Background
In 2016, the U.S. spent $3.3 trillion on health care. That is about 17.9 percent of the nation’s economic output or gross domestic product (GDP). Experts project that by 2026 annual national spending on health care will increase to $5.7 trillion and account for 19.7 percent of GDP. These projections assume that over the long term, health care spending will grow faster than the economy, despite moderate growth in public- and private-sector health care spending since the 2008 economic recession.
High health care spending affects individuals, families, and employers. Individuals and families face higher health care premiums and cost-sharing, and employers and governments must pay more for health insurance and services. In response, employers are finding ways to limit their exposure to health care costs by cutting back on benefits, shifting to high-deductible health plans, or dropping coverage altogether.
Among the primary causes of long-term spending growth are expensive medical technologies, prescription drugs, tests, and procedures. Also, provider-payment systems have incentives that fuel cost growth. Research reveals a large amount of waste and inefficiency in the U.S. health care system. This includes overuse and duplication of services, medical errors, preventable hospitalizations, high administrative costs, and lack of preventive care that could have delayed or completely prevented the need for treatment.