Health Care Costs Keep Rising … Why and Who Pays?

The U.S. spends more on health care than other large, wealthy countries. Concerns about rising costs aren’t new, yet somehow we keep paying the bill. 

KFF’s Larry Levitt, Executive Vice President for Health Policy, explains how we got here, who bears the consequences and why reining in spending systematically may be central to the next big health care debate.

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Video Transcript

Narrated by Larry Levitt, KFF Executive Vice President for Health Policy

It’s hardly controversial to assert that U.S. health care is far less affordable compared with the rest of the world. 

In 2024, the U.S. spent $14,775 per person on health care compared to $7,860 per person in other high-income countries. 

That’s 88% higher than other large, wealthy countries.

Concerns about rising health care costs aren’t new. 

President Barack Obama said in 2009 that the soaring costs of health care make our current course unsustainable. 

President Bill Clinton said in 1992 that health care costs were increasing at unsustainable rates. 

In 1971, President Richard Nixon described a growing crisis in health care, when national health spending had reached what was then an unthinkable 7% of the economy. 

By 2024, U.S. healthcare spending had reached 18% of GDP. 

Somehow, we keep paying the bill even as health spending continues to increase. But there are consequences to rising health care costs. Health spending crowds out other spending priorities for federal, state, and local governments. 

For employers, the rising cost of health benefits can reduce profits, hurt international competitiveness, increase prices, and result in stagnating wages for workers. 

For individuals, unaffordable health care costs can create barriers to care and result in crushing medical debt, bankruptcy, falling behind on other household expenses, and poorer health. 

While government subsidies and employer contributions to health benefits can reduce out-of-pocket premiums for individuals, those costs must be borne by someone. 

And as health care costs increase, there is pressure on the government to reduce spending on health programs and on employers to shift costs to workers. 

Ultimately, the only way to achieve greater health care affordability systematically is to lower underlying health care costs, especially the price of care for hospitals and prescription drugs. 

And that may be central to the next big health care reform debate.