Many health policy researchers talk about bending the cost curve; this means reducing the rate of health care spending below GDP growth. U.S. health spending, however, has consistently grown faster than GDP for nearly a century. Woodward and Wang show that this relationship is surprisingly stable over time, even after the advent of large government entitlements.
“…simple extrapolations of trends observed in the years before Medicare and Medicaid are surprisingly accurate. For example, if one extrapolates the relationship between 1950 and 1960 to the per capita GDP in 2008, the error in predicted per capita NHE in 2008 is 8.6%. Or if one extrapolates the trends defined by the relationship between per capita NHE and per capita GDP in 1929 and 1965 to the per capita GDP in 2008, the error in predicted NHE in 2008 is 11.8%.”
- Woodward, R. S. and Wang, L. (2011), The Oh-so Straight and Narrow Path: Can the Health Care Expenditure Curve be Bent?. Health Economics. doi: 10.1002/hec.1765