Health care spending: growth trends, what’s behind the increases, and who’s paying the most

Health care spending continues to rise but at a slower rate than at the start of the new millennium. That’s according to new numbers released by the federal Bureau of Economic Analysis, which measured growth in spending per person and growth in spending for specific medical conditions.

Both categories saw increases of 1.9 percent in 2013 – significantly lower than the previous 12 years. From 2000 to 2012, the average increase per year was 5.4 percent in per capita spending and 4.3 percent in price of treatment, according to the BEA report.

The top categories of spending were “symptoms,” which includes some preventative services, as well as flus and colds; “circulatory,” which includes heart attacks and high blood pressure; and “musculoskeletal,” which covers conditions such as arthritis and back pain.

This chart created by the BEA illustrates these latest numbers.

Who’s paying and how much?

While Americans spent nearly $2 trillion on medical treatments in 2013, a relatively small portion of the population pays for most of it. A Kaiser Family Foundation analysis found that half the population accounted for 97 percent of all health spending in 2013. And the top 5 percent of health care consumers spend an average of $43,000 a year. The lowest spenders – the bottom 3 percent – average about $250 annually.

2 reasons for health care spending increases

Health care spending now accounts for 17 percent of the U.S. economy – double what it was in 1980. So why does it continue to increase? A recent Associated Press article provides two reasons.

First, consumers have a hard time shopping for health care. While a number of innovative tools can help patients shop and compare, consumers are not rapidly changing their behavior.

Patients will shop if they need an MRI exam on their shoulder, Renya Spak of the benefits consultant Mercer told the AP. But Spak says patients are less likely to seek out the best deal when facing surgery or other major procedures.

“It will never be just like buying a lawn mower,” she says.

Second, there’s always new medical technology – and it’s aimed at making treatments more effective, not less expensive.

“Every year, it’s kind of like Christmas — they deliver all this new stuff and of course, they deliver it at high prices and insurance covers it,” Mark Paul, a health economist with the University of Pennsylvania’s Wharton School, told the AP.

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