Health care costs: market forces and reform

The cost of health care remains an important issue for the U.S. economy. Health care expenditures in 1995 are projected to be over $1 trillion, with the annual growth rate expected to average 8 percent for the 1990-95 period. National health expenditures were equivalent to 13.9 percent of the Gross Domestic Product (GDP) in 1993; 1995 estimates place the ratio at 14.3 percent. The medical care Consumer Price Index for 1994 has shown the smallest increase since 1973 (4.8 percent). This result followed a gain of 5.9 percent in 1993. Health care spending varies by region, with New England having the highest per capita spending and the Rocky Mountain states having the lowest. States with the highest proportions of the population over age 65 tend to be those with the highest health care costs, as well as growth rates, in the country.