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Expand chart
Reproduced from a Kaiser Family Foundation analysis; Chart: Axios Visuals

One of the laws of health care baked into the heads of every policy analyst is that health care spending almost always rises much faster than GDP. Except it hasn’t really been doing that since 2010, and the gap between health spending and GDP growth is projected to continue to be small through 2026.

What we don't know: The cause. We don’t know why the gap has closed (experts disagree and emphasize different factors), and we don’t know if the narrowing is permanent or if the gap will widen again.

The big picture: Health spending is still growing somewhat faster than GDP, meaning it will continue to gobble up more and more of our GDP.

The details: As the chart shows, health spending grew 2.8 percentage points faster than GDP annually from 2000 to 2010, then just a half percentage point faster between 2010 and 2016. It's projected to grow only 1 percent faster than GDP from 2017 to 2026.

Have we seen this movie before? Health spending grew only one percentage point faster annually than GDP in the 1990s, when the economy boomed for much of the decade and managed care reached its peak. By the next decade, the gap widened again.  

  • Even if health care grows only marginally faster than GDP through 2026, it is still projected to grow to 19.7 percent of GDP in 2026 — substantially more than the next highest nation, Switzerland, at 12.4 percent.

Modest errors in the projections are certainly possible and can matter. But the narrowed gap also presents an opportunity. If we were able to shave 1 percent off the projected rate of growth in health spending, it would actually be rising at the same rate as GDP.  

The impact: The health cost problem is multidimensional. Employers worry about their annual premium increases. Policymakers worry about the impact of federal health spending on the budget, and their state counterparts worry about the role Medicaid plays in their budgets.

Experts worry about the value we get for the health care dollar and work on tweaking delivery and payment to improve it. And most of all, consumers worry about paying their health care bills at a time when wage growth has been relatively flat.

The bottom line: The gap between health spending and GDP has long been a preeminent measure of cost, and it has narrowed. Now we should watch to see if the change has staying power.

Go deeper

UN poll: Most see climate change as global emergency amid pandemic

Swedish climate activist Greta Thunberg (C) fronts a Fridays For Future protest at the Swedish Parliament in Stockholm in September. Photo: Jonathan Nacksrtrand/AFP via Getty Images

64% of people from around the world say climate change is a global emergency, a United Nations poll published Wednesday finds.

Why it matters: It's biggest global survey on climate change ever conducted, with some 1.2 million participants from 50 countries — including the U.S. where 65% of those surveyed view climate change as an emergency.

Collins helps contractor before pro-Susan PAC gets donation

Sen. Susan Collins during her reelection campaign. Photo: Scott Eisen/Getty Images

A PAC backing Sen. Susan Collins in her high-stakes reelection campaign received $150,000 from an entity linked to the wife of a defense contractor whose firm Collins helped land a federal contract, new public records show.

Why it matters: The executive, Martin Kao of Honolulu, leaned heavily on his political connections to boost his business, federal prosecutors say in an ongoing criminal case against him. The donation linked to Kao was veiled until last week.

How cutting GOP corporate cash could backfire

Illustration: Aïda Amer/Axios

Companies pulling back on political donations, particularly to members of Congress who voted against certifying President Biden's election win, could inadvertently push Republicans to embrace their party's rightward fringe.

Why it matters: Scores of corporate PACs have paused, scaled back or entirely abandoned their political giving programs. While designed to distance those companies from events that coincided with this month's deadly siege on the U.S. Capitol, research suggests the moves could actually empower the far-right.