What Explains the Bending of the Health Care Cost Curve?

Posted on by John C. Goodman
  • The development of cost saving technology accounts for about 21% of the spending slowdown.
  • Demand changes account for 10-26% of the spending slowdown.
  • Long-run supply elasticities account for 6%.
  • Improvement in health status accounts for 7%.
  • A reduction in medical inflation relative to general price inflation accounts for about 24%.

Source: David M. Cutler and Lev Klarnet,  “Has the United States bent the health care cost curve?” (Brookings Papers on Economic Activity, Spring 2026) via the Conversable Economist.

1 thought on “What Explains the Bending of the Health Care Cost Curve?”

  1. The article talks about the slowed growth of health care spending _relative to GDP._ But how much of this is a result of rapid GDP growth, especially since around 2020, rather than a leveling off of medical spending?
    On the other hand, there is also the adage that if a thing cannot continue forever, it will stop.

    Reply

Join the conversation.