Decomposing Trends in U.S. Health Care Spending Among Nonelderly Adults, 2007-2016

Using the 2007 to 2016 Medical Expenditure Panel Survey-Household Component, this study analyzes trends in per capita health expenditures among nonelderly adults from the Great Recession to the period following full implementation of the Affordable Care Act. We find that the growth in total per capita spending-and specifically for prescription drug and emergency room spending-from 2007-2009 to 2014-2016 was largely driven by increases in expenditures per unit, that is, increases in per unit prices, quality, and/or intensity of treatment. We also find that changes in the health insurance distribution were the largest driver behind the increase in total per capita expenditures over this period, while changes in prevalence of chronic conditions explained a smaller portion of the increase. Identifying policies for containing health care spending growth requires a detailed understanding of the sources of that growth, particularly during periods of economic fluctuations, policy changes, and technological developments.