Health spending accelerating faster than GDP growth

The amount of money spent on health is accelerating faster than the gross domestic product (GDP), according to an Altarum Institute spending brief. Spending in all health categories increased, with prescription drugs leading the pack. The brief suggests that low GDP growth is the main explanation for health spending taking a larger share, rather than a dramatic increase in health spending. According to some CMS projections, health expenditures will continue to grow faster than GDP through 2023, and will account for 19.3 percent of GDP by that date. In 2012, health care spending financed by all levels of government accounted for 44 percent, or $1.2 trillion. By 2023, government contributions to health care spending is projected to account for 48 percent, or $2.5 trillion.

The numbers

In 2014, national health spending grew by 5.2 percent, and health spending in February 2015 was 6.6 percent higher than the previous February. February 2015 GDP data was not yet available, but the GDP growth from January 2014 to January 2015 was 4.3 percent. Although the GDP fell in 2009, it is now 6.3 percent above the December 2007 GDP level excluding health care spending; the report identified December 2007 as the beginning of the recession. If health care is included, real GDP in January 2015 was 8.8 percent above the December 2007 level. By contrast, health care spending has increased by 21.8 percent over pre-recession levels.


Prescription drugs grew the fastest over the last 12 months, at 10.5 percent. Hospital growth was not far behind at 9 percent, which represents a significant amount of growth overall as hospital costs account for one-third of health spending. Prescription drug care growth has been consistently high for the past two years, with a peak of 13.1 percent in December 2014.