A Historical Analysis of Medical Spending Growth, 1960–1993

About half the growth in real per capita medical spending from 1960 to 1993 and two-thirds of its growth from 1983 to 1993 resulted from either the level or the growth of insurance coverage, chiefly the former. Dividing all factors determining the 1960-1993 growth in real per capita medical spending into two major categories, we find that 70 percent of this growth resulted from cost-increasing advances in medical services induced by insurance coverage levels and spending for noncommercial medical research. Only 30 percent was attributable to standard factors: growth in insurance coverage, changes in age/sex mix, and growth in real per capita disposable income.