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Health Care Spending: Historical Trends and New Directions

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  • Alice Chen
  • Dana Goldman

Abstract

Over the last five decades, broad changes in the US health care system have dramatically influenced growth in health care expenditures. These structural changes have also influenced the trajectory of the health economics research. This paper reviews some of the seminal health economics papers (measured by citations) and identifies the salient factors driving the growth of medical expenditures. We find that the research identified – and was strongly influenced by – four eras of expenditure growth: (1) coverage expansion; (2) experimentation with financial incentives; (3) the managed care backlash; and (4) a golden era of declining expenditure growth. We conclude by discussing some themes from this research suggesting optimism that, going forward, we can curb excess expenditure growth above GDP growth without harming population health.

Suggested Citation

  • Alice Chen & Dana Goldman, 2015. "Health Care Spending: Historical Trends and New Directions," NBER Working Papers 21501, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:21501
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    References listed on IDEAS

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    1. Ruhm, Christopher J. & Black, William E., 2002. "Does drinking really decrease in bad times?," Journal of Health Economics, Elsevier, vol. 21(4), pages 659-678, July.
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    3. David M. Cutler, 1998. "Cost Shifting or Cost Cutting? The Incidence of Reductions in Medicare Payments," NBER Chapters, in: Tax Policy and the Economy, Volume 12, pages 1-28, National Bureau of Economic Research, Inc.
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    6. David M. Cutler & Mark McClellan & Joseph P. Newhouse, 2000. "How Does Managed Care Do It?," RAND Journal of Economics, The RAND Corporation, vol. 31(3), pages 526-548, Autumn.
    7. Weisbrod, Burton A, 1991. "The Health Care Quadrilemma: An Essay on Technological Change, Insurance, Quality of Care, and Cost Containment," Journal of Economic Literature, American Economic Association, vol. 29(2), pages 523-552, June.
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    Cited by:

    1. Eunhae Shin, 2019. "Hospital responses to price shocks under the prospective payment system," Health Economics, John Wiley & Sons, Ltd., vol. 28(2), pages 245-260, February.
    2. Azoulay, Pierre & Heggeness, Misty & Kao, Jennifer, 2025. "Medical research and health care finance: Evidence from Academic Medical Centers," Research Policy, Elsevier, vol. 54(2).
    3. Joelle H Fong, 2019. "Out-of-pocket health spending among Medicare beneficiaries: Which chronic diseases are most costly?," PLOS ONE, Public Library of Science, vol. 14(9), pages 1-16, September.
    4. Maryaline Catillon & David Cutler & Thomas Getzen, 2018. "Two Hundred Years of Health and Medical Care: The Importance of Medical Care for Life Expectancy Gains," NBER Working Papers 25330, National Bureau of Economic Research, Inc.
    5. Richard Z. Xie & Erica deFur Malik & Mark T. Linthicum & Jennifer L. Bright, 2021. "Putting Stakeholder Engagement at the Center of Health Economic Modeling for Health Technology Assessment in the United States," PharmacoEconomics, Springer, vol. 39(6), pages 631-638, June.
    6. Mark Elder & Magnus Bengtsson & Lewis Akenji, 2016. "An Optimistic Analysis of the Means of Implementation for Sustainable Development Goals: Thinking about Goals as Means," Sustainability, MDPI, vol. 8(9), pages 1-24, September.

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    More about this item

    JEL classification:

    • I1 - Health, Education, and Welfare - - Health
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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