Analyzing public data in GoodData is easy. Howard Degenholtz, Associate Professor of Health Policy & Management at the University of Pittsburgh is researching the underlying causes of increased healthcare costs in the US. GoodData provides a convenient online space to ‘park data’ and collaborate with health policy experts.

Note: Rounding errors cause different heights on the bars.

In the years from 1960 to 2005, the proportion of GDP devoted to health care has increased from 5.1 to 15.3% In 2007, the Federal Government reported that average per person spending was $7,421, accounting for it was 16.2% of GDP. Without any change to the current laws, the proportion of GDP spent on health care is projected to increase to 20.3% 2018.

To place health care reform proposals in context, over the next 10 years, the US spends $2.2 Trillion a year on health care. Between 2008 and 2018, the total amount that will be spent will be over $35 Trillion, according to the Centers for Medicare and Medicaid Services. An increase of $1 Trillion dollars over that time period is less than a 3%.

This chart shows how the historical increase can be broken down into four different categories. The first two factors can be considered ‘outside’ the health care sector. The largest factor is inflation in the general economy (labeled as ‘economy-wide’), that is the cost of goods, services, and labor that affect all sectors of the economy. The second factor ‘population’ is changes in the size and age structure of the population that affect the number of people using health care services.

The first factor directly related to health care are medical price inflation, that is, increases in the cost of providing a unit of care above and beyond inflation in the general economy. The final category is labeled intensity. This refers to increases in the about care and services per unit of care delivered. For example, a hospitalization in 2005 might involve more tests, more procedures, and more supplies for the same condition than in 1995. These changes also reflect new technologies. Unlike the rest of the economy, for example laptop computers or refridgerators, newer technologies in health care are usually cost-increasing and offer limited savings (e.g., by preventing other expensive service use).

Some technologies improve quality or patient outcomes, however there are significant gaps in the scientific literature about the comparative effectiveness of new medications, surgical procedures or devices. It should be clear from this chart that without addressing intensity, which accounts for 33% of the increase, health care costs will continue to increase beyond what can be accounted for by inflation in the core economy or by population growth or aging.

These data come from the Centers for Medicare and Medicaid Services (CMS) and the National Centers of Health Statistics report titled Health US 2008