"Does the US spend too much on health care?"

Since the first issue of Health Affairs in 1981, this question and its implications have inspired hundreds of studies published in the pages of our journal and elsewhere.

While Health Affairs’ focus on this topic is not new, we are pleased today to bring our readers a new forum for engaging with emerging research that sheds light on how much the nation spends on health care and how we might improve the value of that spending or even change the spending trajectory.

These questions have taken on increasing urgency in the face of the COVID-19 pandemic, which has laid bare striking disparities and shortcomings in health and well-being, suggesting a mismatch between what we spend on health care and the outcomes we hope to achieve.

The Considering Health Spending newsletter is an opportunity to dig into the latest work and some pieces from the Health Affairs archives, all about health care spending and value.

A Classic Piece on Health Spending

This inaugural issue seems an appropriate place to remind readers of one of the most influential and often-cited papers on this topic – 2003’s "It’s the Prices, Stupid" by Gerard Anderson, Uwe Reinhardt, Peter Hussey, and Varduhi Petrosyan.

The authors made a compelling argument that on a per-capita basis, the US does not use more health care than any other country in the OECD – yet our total per capita spending is far greater because we simply pay much higher prices for the same goods and services.

This seminal paper has influenced two decades of additional research, including 2019’s "It’s Still the Prices, Stupid" by Anderson, Hussey, and Petrosyan, and a large and growing body of work on the drivers of US health care prices – much of which will be featured in future issues of this newsletter.

Are We There Yet?

Another ongoing question that’s occupied researchers is whether – and when - the US economy will be unable to sustain further increases in the share of the Gross Domestic Product devoted to health care – a share that reached 17.7 percent in 2019.

Have we reached that point yet? How would we know?

Two pieces from the archive address this question, finding that while we may never know how much health spending is "too much," we already know current spending is poorly allocated and often wasteful.

In a 2018 perspective piece, economist David Cutler argues the US has reached a point where increased spending on medical care has become harmful to the US economy. He cites wasted dollars and increasing health and economic disparities as the main reasons.

In a 2019 blog post, William Frist and Margaret Hamburg, co-chairs of the Health Affairs Council on Health Care Spending and Value, contend that "our health dollars are not reaching all who need care, nor are they necessarily providing appropriate care in the manner that would be most effective."

Looking Ahead

Notwithstanding the important work described above, there remain many unanswered questions about US health care spending.

If "it’s the prices," then why is it the prices?

This question has inspired scholarship focusing in particular on hospital prices, exploring issues of price variation, provider market concentration, labor market dynamics, and many more factors.

Other key questions relate to the health value produced for our dollar, with researchers working to quantify the value of health outcomes, identify high- and low-value spending, and suggest ways to encourage the former while discouraging the latter.

To make sure you don’t miss the latest discussion, please sign up to receive this monthly newsletter and join the LinkedIn group.

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The concept of "consolidation-induced cost shifting" recognizes that changes in public prices for hospital care can affect market structure and, through that mechanism, affect commercial prices. Read more »

Health Affairs’ Considering Health Spending initiative is supported by the National Pharmaceutical Council and Anthem, Inc. and includes three components, all of which will be featured in this monthly newsletter:

· A journal series

· A blog series

· The Health Affairs Council On Health Care Spending and Value

Check out our Considering Health Spending landing page, where you can find every journal and blog article in the series and information about the Council, plus related podcasts and other events.

About Health Affairs

Health Affairs is the leading peer-reviewed journal at the intersection of health, health care, and policy. Published monthly by Project HOPE, the journal is available in print and online. Late-breaking content is also found through healthaffairs.org, Health Affairs Today, and Health Affairs Sunday Update.

Project HOPE is a global health and humanitarian relief organization that places power in the hands of local health care workers to save lives across the globe. Project HOPE has published Health Affairs since 1981.

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