Sandy L asks:
What has changed with healthcare that has made costs spiral out of control in the US? Why was healthcare more affordable just a decade ago? Two decades ago it was even cheaper. I am just glad I had my kids then.
Two things are the primary drivers of healthcare cost increases in the US: 1. more expensive technology and 2. as people become richer, they demand more/better healthcare.
An unsolved mystery (though top health economists are working on it) is why health technology, unlike other technologies, only seems to be in the “more expensive” direction and not in the “cost-saving” direction. There are a lot of theories out there but we haven’t really nailed it down, nor do we really know how to change incentives so that healthcare innovations include price-drops instead of just price increases.
There are a lot of other reasons healthcare costs more in the US than in other countries, but you asked about growth, not the level differences. Still, the fact that our insurance systems are so messed up (leading to lots of red tape, repeated tests, etc.) and the fact that the US is subsidizing innovation for the rest of the world because other countries have price controls on drugs and the US doesn’t are also main contributors to the fact that healthcare costs a lot more in the US than other countries. We could solve the former with a single-payer system, and the latter would have to be solved either by directly investing in innovation or bargaining with other countries to loosen their price controls on new drugs. These two items aren’t really getting worse over time though– they just contribute to the overall level differences. (Malpractice is often brought up by conservatives, and it is a small contributor, but completely getting rid of the problems that malpractice litigation induces if we knew how to do that which we don’t just wouldn’t shave that much cost off. That’s why policy makers haven’t been focusing on it even though politically there would theoretically be bipartisan support for reform. There are bigger gains to problems that are easier to solve from an economic standpoint, if only the Republicans cared about you know, economics and efficiency and so on.)