Increasing Costs

Americans want quality medical care despite its increasingly high cost. In 1970 the United States spent a little more than 7 percent of its gross domestic product (GDP—the total value of all the goods and services produced by the nation) on health care. In 1995 health care expenditures were at a high of 13.4 percent ($990.2 billion) of the GDP. Between 1996 and 2000 that percentage dropped slightly, although actual dollars continued to rise. In 2001 and 2002, however, the cost of health care increased dramatically, to 14.1 percent ($1,420.7 billion) of the GDP in 2001 and 14.9 percent ($1,553.0 billion) of the GDP in 2002. Table 9.1 compares the growth in national health care expenditures and in GDP and presents the national health expenditures as a percentage of the GDP (1980–2002).

The Consumer Price Index (CPI) is a measure of the average change in prices paid by consumers. For many years, the medical...