Health Care Costs Are Under Control, But the Industry Still Gets Its $1 Trillion Bonus Every Year

The Kaiser Family Foundation retweeted an old chart about health care expenditures yesterday, so let’s do one of our own:

The growth rate is slowing down (yay!), but the decadal data from 1970-2000 hides a big bubble in the 70s and 80s. For a longer-term view, here’s plain old medical inflation as calculated by the BLS. This chart shows how much higher medical inflation is compared to general inflation:

Massive increases in health care spending are neither normal nor inevitable. Until the late 70s, medical inflation ran at about 1-2 percent above overall inflation. Then, for nearly two decades, we suddenly went nuts and allowed every player in the health care industry—doctors, hospitals, drug companies, device manufacturers—to go on a wild spree of increasing their prices as much as they felt like. Being a physician changed from being a comfortable, upper-middle-class occupation to being a member of the top 2 percent. Hospital CEOs got rich. Pharmaceutical companies introduced rafts of new medications and discovered they could charge whatever they wanted and no one would stop them.

Finally, in the late 90s, the party ended. We all woke up to discover that an entire sector of the economy had grabbed an extra trillion dollars for itself for no particular reason except that they could get away with it. So we finally got serious about reining in health care costs, and we did. Medical inflation went back to 1-2 percent above overall inflation in the early aughts, and lately it’s been even lower than that.

Unfortunately, the crazy years pushed prices permanently higher. So year in and year out, the health care industry still gets their extra trillion dollars. We’ll probably never claw that back. But at least it’s not getting any bigger these days.

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SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

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Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

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