The Centers for Medicare & Medicaid Services (CMS) has released the 2024 National Health Expenditure (NHE) report, which shows that US health spending grew 7.2% to $5.3 trillion, accounting for 18.0% of the country’s gross domestic product. This increase has led to concerns that healthcare is too expensive and that prices must be reduced. However, the report suggests that the issue is more complex, and that the increase in spending is largely driven by non-price factors such as higher demand and shifts in the mix of goods and services.<\/p>\n
The concept of the Jevons paradox, which states that improving efficiency can lead to increased consumption, is relevant to understanding the healthcare spending trend. In the 19th century, economist William Stanley Jevons observed that improving the efficiency of coal use led to increased coal consumption, as the lower cost made it more accessible and widely used. Similarly, in healthcare, improvements in efficiency, such as reduced administrative burdens and increased access to care, can lead to increased utilization and spending.<\/p>\n
The CMS report highlights that private health insurance enrollment, Affordable Care Act Marketplace enrollment, and total private health insurance spending all increased, contributing to the growth in healthcare spending. Additionally, Medicare and Medicaid spending also grew, with hospital prices rising 3.4%, the fastest rate since 2007. However, the report notes that high insurance coverage does not necessarily equate to high-quality, high-value care, but it does increase the probability that people will seek care and follow through on care plans.<\/p>\n
The key takeaway from the report is that aggregate spending is not a standalone scorecard, and that the increase in spending can be attributed to two different realities: a system that is becoming wasteful or a system that is removing barriers and meeting previously unmet needs. To understand the true impact of healthcare spending, it is essential to examine the compositional changes in care, such as the types of services being utilized, the quality of care, and the outcomes achieved.<\/p>\n
Innovations that make healthcare easier, such as automation, AI-enabled workflow, and virtual-first access, can have unpredictable fiscal signatures, reducing the cost of an encounter while increasing the number of encounters. Therefore, it is crucial to consider potential outcomes more broadly and carefully before reacting with austerity measures. The Jevons paradox suggests that we should expect utilization to respond to improvements in efficiency, and that spending numbers should be read as a map of shifting demand, rather than a simple verdict on whether the system is “working.” Ultimately, the US healthcare system is exceptionally good at turning access, coverage, and innovation into utilization, and the NHE 2024 release is a reminder that making care easier will lead to increased use.<\/p>\n","protected":false},"excerpt":{"rendered":"
The Centers for Medicare & Medicaid Services (CMS) has released the 2024 National Health Expenditure (NHE) report, which shows that US health spending grew 7.2% to $5.3 trillion, accounting for 18.0% of the country’s gross domestic product. This increase has led to concerns that healthcare is too expensive and that prices must be reduced. However, […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"fifu_image_url":"","fifu_image_alt":"","_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[31,22],"tags":[],"class_list":["post-222722","post","type-post","status-publish","format-standard","hentry","category-care","category-insurance"],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9ibIB-VWi","jetpack_sharing_enabled":true,"jetpack-related-posts":[{"id":222774,"url":"https:\/\/smallnews.in\/insurance\/2026\/02\/09\/the-rising-cost-of-health-care-is-a-complex-issue-with-multiple-contributing-factors-some-of-the-key-reasons-includeadvancements-in-medical-technology-new-treatments-medications-and-equipment\/","url_meta":{"origin":222722,"position":0},"title":"The rising cost of health care is a complex issue with multiple contributing factors. Some of the key reasons include:\n\n\nAdvancements in Medical Technology: New treatments, medications, and equipment are continually being developed, which can drive up costs. These advancements often come with a high price tag, contributing to increased healthcare expenditures.\n\n\nAging Population: As the population ages, there is a greater demand for health care services. Older adults typically require more medical care due to age-related health issues, leading to higher costs.\n\n\nChronic Diseases: The prevalence of chronic diseases such as diabetes, heart disease, and obesity has increased. Managing these conditions often requires ongoing, costly treatments and medications.\n\n\nAdministrative Costs: The healthcare system involves a significant amount of administrative work, including billing, insurance claims, and regulatory compliance. These tasks are costly and contribute to the overall expense of healthcare.\n\n\nPharmaceutical Prices: The cost of prescription medications has risen significantly. New and innovative drugs, especially those for rare or complex conditions, can be very expensive.\n\n\nDefensive Medicine: To avoid potential lawsuits, healthcare providers may order additional tests or procedures, which can drive up costs without necessarily improving patient outcomes.\n\n\nInsurance and Payment Systems: The way healthcare is financed, including insurance premiums, deductibles, and copays, can make it inaccessible or unaffordable for many people, affecting the overall cost landscape.\n\n\nHospital and Healthcare Facility Costs: The cost of maintaining and operating hospitals and other healthcare facilities, including staff salaries, equipment, and supplies, contributes to the overall expense of healthcare.\n\n\nRegulatory Compliance: Healthcare providers must comply with a myriad of regulations, which can be costly in terms of time, personnel, and resources.\n\n\nLack of Transparency and Competition: In some areas, limited competition among healthcare providers and a lack of price transparency can lead to higher costs, as consumers may not be able to make informed decisions based on price and quality.","author":"Team Small News","date":"February 9, 2026","format":false,"excerpt":"The rising cost of health insurance in the United States is a pressing concern, with premiums for employer-sponsored insurance expected to increase by 9% in 2026. Public spending on Medicare, Medicaid, and Obamacare is also surging. However, this increase is not due to excessive profits among insurers or hospitals, but\u2026","rel":"","context":"In "Care"","block_context":{"text":"Care","link":"https:\/\/smallnews.in\/insurance\/category\/care\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":222776,"url":"https:\/\/smallnews.in\/insurance\/2026\/02\/10\/as-healthcare-costs-continue-to-rise-the-need-for-effective-regulation-of-the-insurance-industry-has-become-increasingly-important-with-medical-expenses-skyrocketing-the-burden-on-individuals-fami\/","url_meta":{"origin":222722,"position":1},"title":"As healthcare costs continue to rise, the need for effective regulation of the insurance industry has become increasingly important. With medical expenses skyrocketing, the burden on individuals, families, and businesses is growing, making it essential to oversee insurance providers to ensure they are operating fairly and in the best interest of their policyholders. Regulations can help prevent exploitative practices, promote transparency, and guarantee that insurance companies are providing adequate coverage to those who need it. By regulating the insurance industry, governments can help mitigate the financial strain of rising healthcare costs and safeguard the well-being of their citizens.","author":"Team Small News","date":"February 10, 2026","format":false,"excerpt":"A recent report found that approximately one in five health care claims in Massachusetts were rejected in 2024, highlighting the challenges that many people face in accessing health care services due to insurance issues. In response, the state has introduced new regulations aimed at reducing administrative burdens and improving patient\u2026","rel":"","context":"In "Care"","block_context":{"text":"Care","link":"https:\/\/smallnews.in\/insurance\/category\/care\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":222757,"url":"https:\/\/smallnews.in\/insurance\/2026\/01\/29\/as-federal-health-care-subsidies-expire-state-and-city-efforts-aim-to-lower-insurance-costs-baystatebanner-com\/","url_meta":{"origin":222722,"position":2},"title":"As Federal Health Care Subsidies Expire, State and City Efforts Aim to Lower Insurance Costs – baystatebanner.com","author":"Team Small News","date":"January 29, 2026","format":false,"excerpt":"As federal healthcare subsidies are set to expire, state and city efforts are underway to lower insurance costs for individuals and families. The American Rescue Plan Act (ARPA) provided temporary subsidies to make health insurance more affordable, but these subsidies are slated to end in 2023. To mitigate the potential\u2026","rel":"","context":"In "Care"","block_context":{"text":"Care","link":"https:\/\/smallnews.in\/insurance\/category\/care\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":222744,"url":"https:\/\/smallnews.in\/insurance\/2026\/01\/27\/health-insurance-home-loans-and-preventive-care-benefits-are-the-top-demands-of-taxpayers\/","url_meta":{"origin":222722,"position":3},"title":"Health Insurance, Home Loans, and Preventive Care Benefits are the top demands of taxpayers.","author":"Team Small News","date":"January 27, 2026","format":false,"excerpt":"As the Union Budget 2026-27 approaches, Expectations are high among salaried individuals, senior citizens, and high-income earners for significant changes in the new tax regime. With rising living costs, medical inflation, and housing expenses putting pressure on household budgets, tax experts believe the government has an opportunity to fine-tune the\u2026","rel":"","context":"In "Care"","block_context":{"text":"Care","link":"https:\/\/smallnews.in\/insurance\/category\/care\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":222730,"url":"https:\/\/smallnews.in\/insurance\/2026\/01\/25\/big-insurers-attempt-to-redirect-blame-for-exorbitant-health-costs-to-hospitals-and-pharmaceutical-companies-the-new-york-times\/","url_meta":{"origin":222722,"position":4},"title":"Big Insurers Attempt to Redirect Blame for Exorbitant Health Costs to Hospitals and Pharmaceutical Companies – The New York Times","author":"Team Small News","date":"January 25, 2026","format":false,"excerpt":"The healthcare industry is witnessing a blame game between big insurers, hospitals, and pharmaceutical companies over high health costs. Major insurance companies, such as UnitedHealth Group and Anthem, are attempting to shift the blame for rising healthcare costs to hospitals and drug makers. This comes as the industry faces increasing\u2026","rel":"","context":"In "Care"","block_context":{"text":"Care","link":"https:\/\/smallnews.in\/insurance\/category\/care\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":222762,"url":"https:\/\/smallnews.in\/insurance\/2026\/01\/31\/chief-ministers-health-insurance-scheme-reveals-that-kidney-and-heart-treatments-are-the-most-common-claims-in-chennai\/","url_meta":{"origin":222722,"position":5},"title":"Chief Minister’s health insurance scheme reveals that kidney and heart treatments are the most common claims in Chennai.","author":"Team Small News","date":"January 31, 2026","format":false,"excerpt":"The Chief Minister's Health Insurance Scheme in Tamil Nadu has reported that treatment for kidney and heart diseases are the most common claims under the scheme. According to data from the Tamil Nadu State Health Systems Project, dialysis is the most opted procedure, followed by angiography-stenting and cardiac bypass surgery.\u2026","rel":"","context":"In "Insurance"","block_context":{"text":"Insurance","link":"https:\/\/smallnews.in\/insurance\/category\/insurance\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"_links":{"self":[{"href":"https:\/\/smallnews.in\/insurance\/wp-json\/wp\/v2\/posts\/222722","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/smallnews.in\/insurance\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/smallnews.in\/insurance\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/smallnews.in\/insurance\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/smallnews.in\/insurance\/wp-json\/wp\/v2\/comments?post=222722"}],"version-history":[{"count":0,"href":"https:\/\/smallnews.in\/insurance\/wp-json\/wp\/v2\/posts\/222722\/revisions"}],"wp:attachment":[{"href":"https:\/\/smallnews.in\/insurance\/wp-json\/wp\/v2\/media?parent=222722"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/smallnews.in\/insurance\/wp-json\/wp\/v2\/categories?post=222722"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/smallnews.in\/insurance\/wp-json\/wp\/v2\/tags?post=222722"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}