The Congressional Budget Office has released its 2014 long-term budget outlook, which projects federal debt held by the public will rise during the next 25 years to the highest percentage in the country’s history since just after World War II.
The report also includes information and estimates concerning healthcare spending, along with information on the historical growth of healthcare spending. Here are three key takeaways from the report healthcare spending growth during the past few decades.
1. Total U.S. healthcare spending — including both private and public expenditures — has notably increased as a share of gross domestic product during the last several decades, according to the CBO. Total national spending on healthcare services and supplies went up from 4.6 percent of GDP in calendar year 1960 to 9.5 percent in 1985 and 16.2 percent in 2012. Under the CBO’s extended baseline, national healthcare spending is projected to increase to 22 percent of GDP by 2039.
2. However, healthcare spending growth slowed — staying roughly stable as a share of GDP — from 1993 to 2002. Some analysts have said this slowdown resulted from relatively rapid economic growth, an increase in managed care plan enrollment and excess capacity among some types of providers, which meant health plans had more leverage in negotiating payments.
3. Spending also slowed from 2009 to 2012. The reasons behind the more recent period of slow spending growth — during which healthcare spending growth hit an all-time low of 3.6 percent for 2011 and remained slow at an annual rate of 3.7 percent in 2012 (the most recent year for which data are available) — aren’t clear. Analysts have reached different conclusions about the roles the weak economy and changes in healthcare delivery and financing systems (such as states’ efforts to control Medicaid spending and the rise of high-deductible health plans) played in the deceleration, according to the CBO.