Health Care Cost Growth: Trends, Sources, Strategies, and Feedback Loops (pdf)

his chapter discusses reasons for the rapid increases in health care costs. Even though hospital services are by far the largest segment of U.S. health care spending, expenditures on other services, such as physicians’ services and prescription drugs have increased at a faster rate. The cost growth is attributed to medical price inflation, the growth in volume of services, and the growth in intensity of services. Most expenditures are driven, not by inflating medical prices, but rather by the increasing volume and intensity of services. In the next decade, the rate of cost growth is expected to accelerate.