Monthly blog by senior staff on public policy + updates.
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Welcome to the second in our series on health care. (If you missed the first one, check it out at blog.cgr.org.) Today we discuss the growth in health care cost, both how much and how fast it has grown, and the reasons. Next week’s column will focus on ways to reduce health care costs—or, more realistically, to slow the rate of growth.
In 1960, health care spending was 5% of gross domestic product (GDP). This year it’s expected to reach about 18%. For the past 30 years, health care cost has been rising 2% faster than GDP.
On the one hand, perhaps this doesn’t matter. We are spending more on health care and sometimes we get more for our money. Medical science has discovered new therapies. Pharmaceutical companies have identified fabulously successful new drugs. The survival rate for many dread diseases has increased significantly. For example, many cancer sufferers are living longer and experiencing a higher quality of life. Some diseases that were fatal only a few years ago—AIDS is the most prominent example—are now considered almost chronic illnesses. But these new therapies, these new drugs, these new treatments aren’t cheap. Genentech’s Avastin, currently used for a broad range of cancers, can cost from $4,000 to $9,000 per month.