What's Behind the Health Expenditure Trends?

In this paper, we review the literature on a number of the potential explanations for the rise in health care expenditures in the United States: the aging population, the costs of dying, technology, physician incomes, administrative costs, prescription drugs, managed care, and the underfunding of public health. Our goal is not to pass definitive judgment on the force(s) driving health care costs, but rather to make the reader a more educated consumer of these widely cited data. We place special emphasis on how health expenditures are measured and the inherent weaknesses in the methodology. We find that frequently it is difficult to accurately estimate how individual forces influence total health care expenditures. Moreover, we conclude that interpreting the causes of the rise in expenditures goes beyond simple observations of trends and depends on how we value various segments and aspects of health and health care.