Health care spending in 1994: slowest in decades

Falling medical prices and slowing growth in private health insurance premiums diverted the spotlight from large-scale reform of the health care system in 1994. In aggregate, growth in health expenditures dropped to its lowest rate in more than thirty years. Even at this low rate, health spending grew faster than gross domestic product (GDP), but the economy easily absorbed these modest increases. In this picture of moderation, there was one disconcerting note: Medicare spending continued to increase at double-digit rates. Although Medicare's more rapid spending growth seems out of sync with the current modest health spending growth trends in the private sector, closer examination of factors accounting for growth in 1994 suggests that some difference is warranted.