U.S. health spending began soaring in 1980

It’s been well documented the U.S. spends more per capita on healthcare than other high-income nations. A new analysis from the New York Times’ Upshot shows that that hasn’t always been the case.

Until 1980, the U.S. was similar to those other countries in per capita spending and life expectancy. Princeton University sociology professor Paul Starr, PhD, said high inflation and sluggish economic growth in the late 1970s hurt countries’ abilities to afford healthcare. The difference? "[O]ther countries have been able to put limits on healthcare prices and spending” while the U.S. relied on market forces.

As spending constraints eased, costly technological innovations began a “medical arms race” among hospitals and other providers, according to Brookings Institution health economist Henry Aaron, PhD. Some of these valuable but expensive treatments included coronary artery bypass grafting and drugs for HIV.

“Confronted with fiscal pressures, as the share of [gross domestic product] absorbed by healthcare spending began to get serious, other nations had mechanisms to hold down spending,” Aaron said. “We didn’t.”

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