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Medicine and Public Policy |

Price and Utilization: Why We Must Target Both to Curb Health Care Costs

Topher Spiro, JD; Emily Oshima Lee, MA; and Ezekiel J. Emanuel, MD, PhD
[+] Article and Author Information

From the Center for American Progress, Washington, DC, and the University of Pennsylvania, Philadelphia, Pennsylvania.

Disclaimer: The statements made and views expressed are solely the responsibility of the authors.

Grant Support: By the Peter G. Peterson Foundation.

Potential Conflicts of Interest: Disclosures can be viewed at www.acponline.org/authors/icmje/ConflictOfInterestForms.do?msNum=M12-1192.

Requests for Single Reprints: Emily Oshima Lee, MA, Center for American Progress, 1333 H Street Northwest, Washington, DC 20005; e-mail, eoshima@americanprogress.org.

Current Author Addresses: Mr. Spiro, Ms. Lee, and Dr. Emanuel: Center for American Progress, 1333 H Street Northwest, Washington, DC 20005.

Author Contributions: Conception and design: T. Spiro, E.J. Emanuel.

Analysis and interpretation of the data: T. Spiro, E.O. Lee.

Drafting of the article: T. Spiro, E.O. Lee, E.J. Emanuel.

Critical revision of the article for important intellectual content: T. Spiro, E.O. Lee.

Final approval of the article: E.O. Lee, E.J. Emanuel.

Administrative, technical, or logistic support: E.O. Lee.

Collection and assembly of data: T. Spiro, E.O. Lee, E.J. Emanuel.


Ann Intern Med. 2012;157(8):586-590. doi:10.7326/0003-4819-157-8-201210160-00014
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The United States spends nearly $8000 per person on health care annually. Even for a wealthy country, this amount is substantially more than would be expected and 2.5 times the average spent by other Organization for Economic Cooperation and Development (OECD) countries. The growth rate of health care spending in the United States has also far outpaced that in all other high-income OECD countries since 1970, even accounting for population growth. This increase in health spending threatens to squeeze out critical investments in education and infrastructure. To successfully develop and implement policies that effectively address both the level and growth of U.S. health care costs, it is critical to first understand cost drivers. Many health policy and economics scholars have contributed to an ongoing debate on whether to blame high prices or high utilization of services for escalating health care spending in the United States. This paper argues that price and volume both contribute to high and increasing health care costs, along with high administrative costs, supply issues, and the fee-for-service payment system. Initial strategies to contain costs might include implementation and expansion of bundled payment systems and competitive bidding.

Figures

Grahic Jump Location
Figure.

Health care spending growth, by price and utilization components.

Dotted lines demarcate recession periods. (Reproduced from reference (27) with permission of the Altarum Institute.)

Grahic Jump Location

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