Health Care Spending Growth Has Slowed: Will the Bend in the Curve Continue? / Sheila D. Smith, Joseph P. Newhouse, Gigi A. Cuckler.

Format:

Book

Author/Creator:

Smith, Sheila D.

Contributor:

Newhouse, Joseph P.

Cuckler, Gigi A.

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w30782.

NBER working paper series no. w30782

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2022.

Summary:

Over 2009-2019 the seemingly inexorable rise in health care's share of GDP markedly slowed, both in the US and elsewhere. To address whether this slowdown represents a reduced steady-state growth rate or just a temporary pause we specify and estimate a decomposition of health care spending growth. The post-2009 slowdown was importantly influenced by four factors. Population aging increased health care's share of GDP, but three other factors more than offset the effect of aging: a temporary income effect stemming from the Great Recession; slowing relative medical price inflation; and a possibly longer lasting slowdown in the nature of technological change to increase the rate of cost-saving innovation. Looking forward, the post-2009 moderation in the role of technological change as a driver of growth, if sustained, implies a reduction of 0.8 percentage points in health care spending growth; a sizeable decline in the context of the 2.0 percentage point differential in growth between health care spending and GDP in the 1970 to 2019 period.

Notes:

December 2022.

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