Report examines key drivers of healthcare cost growth in the U.S.

A report by the Bipartisan Policy Center that examines key drivers of health care costs in the United States concludes that although many experts think that the Patient Protection and Affordable Care Act will decrease the number of uninsured Americans and encourage higher quality care, as well as help control costs, further action is needed in order to slow the rate of healthcare cost growth in the U.S.  

According to the report, although the growth rate of national health care spending slowed in recent years, CMS projects that it will return to a rapid rate of increase in the near future.  Key drivers of healthcare spending in the U.S. include:

  • Reimbursement under the fee-for-service model generates a strong incentive to perform a high volume of tests and services, regardless of whether those services improve quality or contribute to a broader effort to manage care.
  • Providers are paid for volume rather than patient outcomes, generating little financial incentive to coordinate with others to deliver more efficient care.
  • Our complex system of payment and delivery leads to increased paperwork and the need for greater administrative resources, raising provider and payer costs.
  • The aging of the population will have a significant impact on health care spending growth.
  • The rapidly increasing number of individuals with chronic disease accounts for a disproportionate percentage of overall health spending.
  • Advances in medical technology can both increase health system efficiency and encourage unnecessary utilization of expensive treatments in fee-for-service.
  • Access to health care services with little cost-sharing encourages higher care utilization and leads to increased spending.
  • The U.S. pays higher prices for health services, which leads to higher spending.
  • The high ratio of specialty physicians in the U.S. can encourage utilization of higher cost services.

The authors conclude that there is no single driver of increasing health costs in the U.S. and call for options to reduce costs and improve quality of care. 

(Sources: AHA News Now,, September  20, 2012; Bipartisan Policy Center Report,, September 2012)