New Marketplace

My Favorite Slide: Understanding the Growth of Health Care Spending

Infographic · January 30, 2018

Changes in household spending 1984-2014 health care spending

  Click To Enlarge.

This is one of my favorite slides because it shows to what extent health care costs have had an impact on the everyday life of Americans over the course of a generation. During the three decades from 1984 to 2014, many societal, economic, and environmental changes have occurred. After all, in 1984, we didn’t have the worldwide web, smartphones, or any of the benefits that the Internet has brought us. But we did have relatively inexpensive restaurants, clothing, and higher education. We also had significantly lower costs of care, and health spending was “only” 10% of the GDP.

Fast forward to 2014: health care consumes 8% of household spending — up 67% from less than 5%. At the same time, company-sponsored pensions disappeared, forcing households to save more for retirement and pushing money into 401(k) plans. That spending grew 24%, raising the household spend in that category to 10.7%, up from 8.6%. Of course, that came at the expense of other spending because, when all is said and done, something’s gotta give. It’s easy to guess what comes first for most: housing, transportation, food, personal insurance/pensions, and health care, in that order. But while the 3.2 point increase over 30 years may seem modest, the 67% growth rate of health care spending exceeds all other categories.

We often forget the wise statement from the late Uwe Reinhardt that households pay the entire health care bill of the United States, but this chart reminds us of that and its effect on the rest of the economy.

New Call for Submissions ­to NEJM Catalyst

Connect

A weekly email newsletter featuring the latest actionable ideas and practical innovations from NEJM Catalyst.

Learn More »

More From New Marketplace
Robert Gavin head shot

Amazon and CVS: Short-Lived Unicorns in Health Care, or Healers of the “Tapeworm”?

Will Amazon–Berkshire Hathaway–JP Morgan and CVS-Aetna change the health care game? To one health care employer purchaser, these announcements feel a lot like Groundhog Day.

Fiona Scott Morton head shot

We Can’t Spend All Our Money on Health Care

We have to think about how much we want to spend on health according to how much it’s worth to us at the margin.

Simplified Chain of Production for Primary Care Services Generating Retail Prescriptions. Solid arrows indicate contractual relationships or ownership, and the dashed arrow indicates referral for prescription.

Does CVS–Aetna Spell the End of Business as Usual?

What might one of the largest mergers in history mean for the health care delivery system?

Lack of Incentive Is Top Barrier to Implementing Value-Based Payment

Survey Snapshot: Payer-Provider Alignment Is Difficult Even for Integrated Organizations

NEJM Catalyst Insights Council members say stronger incentives and better use of analytics could improve alignment.

Kaplan04_pullquote Time to Sink Two Canoe Payment Models Argument

Time to Sink the Two-Canoe Argument

Although the transition from fee-for-service to quality-based payment can leave physicians feeling trapped “with a foot in two canoes” while straddling the two payment methods, there are compelling ethical, professional, and business reasons against rationalizing continued support of fee-for-service medicine.

Mostashari01_pullquote - Medicare Advantage Holds the Key to Reforming the ACO Program

Medicare Advantage Holds the Key to Reforming the ACO Program

Value-based care continues to be the emphasis of federal policymakers, as well as many providers. Aligning Medicare Advantage with ACOs would boost both programs.

Physician Group Practices BPCI Classic Success and Looking Ahead to BPCI Advanced Bundled Payments

Physician Group Practices: Succeeding in Bundled Payments

Physician groups are demonstrating their ability to deliver care in new and innovative ways as part of the nationwide effort to transform health care delivery through value-based payment models. The physician experience and perspective is invaluable and should remain an important component of any shift to value-based care.

How Aligned Are Payers and Providers in Working Together to Achieve Value-Based Care

New Marketplace Survey: Payers and Providers Remain Far Apart

Health care stakeholders are not aligned in important goals and in large part are not working together to achieve value-based care, according to the NEJM Catalyst Insights Council. They are waiting on government regulators to change the payment model — including, possibly, single-payer health care.

Comparison of Select Characteristics of the Sample and Shared Savings Program - MMSP ACO - Physician-Led ACOs

Do Independent Physician-Led ACOs Have a Future?

While some of these smaller organizations are succeeding, they do face numerous challenges, and there is a need for both regulatory change as well as greater sharing of peer-based resources and best practices.

Disruption of Innovative Mergers in Health Care Industry - BDO graphic

Innovative Mergers Will Disrupt Health Care

The NEJM Catalyst Insights Council expects outside players to have a major impact on the industry over the next three years.

Connect

A weekly email newsletter featuring the latest actionable ideas and practical innovations from NEJM Catalyst.

Learn More »

Topics

We Can’t Spend All Our Money…

We have to think about how much we want to spend on health according to…

Change the Model → Change the…

If we’re going to change the health care payment model, do we need to change…

Change the Model → Change the…

If we’re going to change the health care payment model, do we need to change…

Insights Council

Have a voice. Join other health care leaders effecting change, shaping tomorrow.

Apply Now