A Historical Perspective on Where We Are

David Kibbe
Health and Human Services (HHS) just released data on 2010 health expenditures, reporting that we, as a nation, have now reached the $2.6 trillion mark, consuming 17.9% of our GDP. Reaching that new mark required 3.9% annual growth vs. 3.8% in 2009. On the surface, the rate of growth seems less alarming than the insurance premium trends of 7%, 8%, and more that have been common year after year over the past decade. Yet the reality is that the changes are really like comparing apples and oranges, as the aggregate figures provided by HHS include a number of factors that mitigate the apparent modest rate of increase. Often, to really see where we are, we need to see where we were. In 1978, as I started my graduate studies in health care economics and finance, health care expenditures were approximately $250 billion in the U.S. I still remember my mother, a hospital nursing administrator, showing me the financial records of a hospital that could fit on one large table in approximately five large filing containers. There was already growth and complexity in health care compared even to the prior decade, but compared to today, it was a simpler, less expensive world, to be sure. So, now today, 34 years later, we have a health care economy that is 10 times that size.

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