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For decades, the level and growth of US health care spending has diverged from both international and domestic norms, leading many to characterize rising health expenditures as “unsustainable.” Between 1970 and 2019, total US health spending grew from 6.9 percent of gross domestic product (GDP) to 17.7 percent of GDP, according to the Centers for Medicare and Medicaid Services (CMS). In 2020, amid unique strain on the health care system and a dramatic economic downturn due to the COVID-19 pandemic, health spending accounted for nearly one-fifth (19.7 percent) of US GDP. According to prepandemic analysis, health spending was not projected to reach this level until 2028, and it remains to be seen how the pandemic will affect the long-term trajectory of health spending. Meanwhile, the Organization for Economic Cooperation and Development (OECD) estimated that total health spending averaged 8.8 percent of GDP among member countries in 2019 compared with 16.8 percent in the US.
In 2019 Health Affairs launched the nonpartisan Council on Health Care Spending and Value to study excessive health spending in the US and recommend strategies to address it. The council, which plans to release its recommendations in early 2023, defines excessive spending as that which both diverges from a norm and is not commensurate with the health it produces. This research brief is one in a series of briefs that provides snapshots of key literature that informed the council’s inquiry into health spending drivers and interventions.