U.S. Health Care Spending:

Trends, Contributing Factors, and Proposals for Reform

T-HRD-91-16: Published: Apr 17, 1991. Publicly Released: Apr 17, 1991.

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GAO discussed U.S. health care spending, problems of the U.S. health care system, and reform issues. GAO noted that: (1) in 1990, over 12 percent of U.S. national income went to buying health care services, and if the growth trend continues, nearly 15 percent of the gross national product will be spent on health care by 2000; (2) in 1987, U.S. corporations' employee health care costs equalled more than 94 percent of total after-tax corporate profits; (3) many states had rising Medicaid expenses, and financed increases by cutting benefits, tightening eligibility, and reducing reimbursements to providers; and (4) the aging of the population, the rise in family incomes, the labor-intensive nature of health care services, and the steady stream of new procedures and technologies contributed to the growth in health care spending. GAO also noted that other countries contained health care cost growth by: (1) instituting insurance systems that covered all citizens; (2) applying the same rules to all payers, whether public or private; and (3) setting spending targets on hospital budgets and physician expenditures, and putting controls on technology. GAO believes that: (1) other countries spend substantially less per capita on health care and leave no citizen uninsured; and (2) U.S. health care reform must be comprehensive to restrain the escalation in health care spending and free resources for other important uses.

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