Accounting for the cost of U.S. healthcare: Pre-reform trends and the impact of the recession (2011)

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Spending on health care in the United States is facing unprecedented public scrutiny. Cast into the spotlight by the intense debate that surrounded the passage of the Affordable Care Act (ACA), the cost of health care has since become a focal point of related debates over government spending, entitlement reform and ways to reduce the federal deficit. It is easy to see why. The United States spends more on health care, both per capita and as a share of gross domestic product, than any other country in the world. In 2009, spending on health care reached a record high $2.5 trillion, or 17.6 percent of U.S. GDP.

While record spending on health care is dominating headlines, the healthcare industry finds itself in a state of flux. Stakeholders across the healthcare economy are in peak preparation for implementation of the Affordable Care Act, while simultaneously dealing with the ongoing effects of the worst recession since the Great Depression.

This report is intended to shed light on the underlying dynamics and trends shaping the healthcare industry in this period of rapid change and uncertainty. The third in our series of papers examining healthcare spending in the United States, this analysis examines trends in healthcare spending, both overall and by category of care. It also compares healthcare expenditures in the U.S. to those in other economically developed countries, accounting for differences in wealth.

We focus on the period between 2006 and 2009 – the last year for which we have comprehensive international spending data – with an early look at U.S. spending levels in 2010. Focusing on this 3-year window allows us to examine the impact of the “Great Recession”, which ran from December 2007 to June 2009, as well as the forces shaping the healthcare landscape leading into implementation of the ACA starting in early 2010.

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