The year 2015 may be the year that we said goodbye to what some have called the “new normal” of health care spending. It’s becoming ever more clear that the unexpected and remarkably consistent slowdown in health care spending that began in the early 2000s is over. According to updated data from the economists and statisticians at the Centers for Medicare and Medicaid Services, 2015’s health spending hit $3.2 trillion, growing at 5.8 percent from 2014. That edges us ever closer to the growth rate just before the Great Recession, when health spending grew around 6.5 percent.
But as we return to the “old normal” of health care cost growth, our health care system looks radically different under the hood. The close of this episode has important lessons for policymakers, the incoming Trump administration, and health policy analysts.
Where Do We Stand?
At $3.2 trillion, health care now consumes 17.8 percent of GDP — an unfortunate new record on the heels of the slowest health care spending growth we’ve ever seen. While the magnitude of this slowdown has been widely discussed, a chart from the new report illustrates it particularly well.
Exhibit 1
Source: National Health Spending: Faster Growth In 2015 As Coverage Expands And Utilization Increases by Anne B. Martin, Micah Hartman, Benjamin Washington, Aaron Catlin, and the National Health Expenditure Accounts Team, Health Affairs, January 2017.
After hitting near double digit growth in 2002, national health spending growth plummeted to a low of 2.9 percent in 2013. Why this slowdown happened is still largely an open question. Researchers from...
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Yevgeniy Feyman is an adjunct fellow at the Manhattan Institute and a senior research assistant at the Department of Health Policy and Management at the Harvard School of Public Health. Previously, he was MI's deputy director of health policy. Follow him on Twitter here.
This piece originally appeared in Health Affairs