How Much to Care
National Health Care Spending Increased 7.2 Percent In 2024 As Utilization Remained Elevated
Micah Hartman et al.
Health Affairs, forthcoming
Abstract:
Health care spending in the US reached $5.3 trillion and increased 7.2 percent in 2024, similar to growth of 7.4 percent in 2023, as increased demand for health care influenced this two-year trend. As in 2023, the use and intensity of health care goods and services continued to grow rapidly in 2024, particularly for hospital care, physician and clinical services, and retail prescription drugs. The insured share of the population remained relatively high in 2024, at 91.8 percent, after its peak in 2023 of 92.5 percent. Health care spending growth continued to outpace overall economic growth in 2024, and as a result, the health care share of the economy increased from 17.7 percent in 2023 to 18.0 percent in 2024.
Do GLP-1 Medications Pay for Themselves?
Coady Wing et al.
NBER Working Paper, January 2026
Abstract:
Glucagon-like peptide-1 receptor agonists (GLP-1s) represent a major improvement in treatment of diabetes, obesity, and cardiovascular risk reduction, but they are also among the most expensive drugs in widespread use and the subject of significant policy debate. The high price of these drugs may overstate their net cost if the health improvements they produce lead to reduced downstream health care use and medical spending, that is, cost offsets. We estimate such offsets using insurance claims data, examining the effects of GLP-1 initiation on subsequent GLP-1 use and spending, and on other non-GLP-1 spending. We use a stacked difference-in-differences design, comparing patients initiating GLP-1 medication to not-yet-treated controls who initiate GLP-1s several months or years later, allowing us to control for underlying time trends and baseline characteristics. Overall, we do not find a reduction in downstream medical spending. Although GLP-1 initiation reduces spending on other diabetes medications, total non-GLP-1 spending increases, driven by higher outpatient health care use; GLP- 1 drug spending rises mechanically. For health care payers, the relevant cost of GLP-1 initiation therefore extends beyond the sticker price of the drug. We find similar results across subgroups of GLP-1 initiators including those with prior cardiovascular disease and those without diabetes (consistent with obesity indication). Our main results examine spending responses over the first year after initiation. However, we also estimate longer run effects in a smaller sample and find no cost offsets even five years after GLP-1 initiation. Taken together, these results suggest that payers facing the costs of GLP-1 coverage are unlikely to see large savings from reduced spending on other care. If GLP-1 therapies ultimately yield cost savings, they are likely to occur only over longer horizons or through non-medical channels.
Trends In Biopharmaceutical Clinical Trials After Medicare Drug Price Negotiation
So-Yeon Kang, Mingqian Liu & Yunan Ji
Health Affairs, January 2025, Pages 48-53
Abstract:
The Inflation Reduction Act of 2022 authorized Medicare to negotiate prices for selected drugs, with implications for innovation. Using ClinicalTrials.gov data on biopharmaceutical trials initiated during 2015-24, we found that overall trial activity remained stable, returning to prepandemic levels, but manufacturers with drugs subject to negotiation initiated fewer trials, particularly in certain cancers.
Re-Examining Geographic Variation in Health and Health Care
Amy Finkelstein & Matthew Gentzkow
NBER Working Paper, January 2026
Abstract:
A large literature has documented widespread variation in health care spending per capita across areas of the United States without correspondingly better health outcomes. Recent work has used mover designs to estimate the causal impact of place on both health care spending and mortality. In this paper, we investigate whether places that increase health care spending also tend to be places that increase health. We find that they do not and discuss the implications.
The Role of Insurers in Health Care Spending and Production: Evidence from Utah
Benjamin Handel et al.
NBER Working Paper, December 2025
Abstract:
Private health insurers play a central role in determining the cost and quantity of health care in the United States. Despite this centrality, there has been limited empirical work studying how insurers differentially affect spending and consumption, especially for expensive and pervasive chronic conditions. We use hundreds of natural experiments involving employers switching their primary health insurer, together with a movers design, to estimate these causal effects. We find meaningful differences in total cost and prices for medical and pharmaceutical spending. Within-person changes in spending caused by forced reassignment across pairs of insurers, holding fixed plan generosity, are as large as 30% of total medical spending and 37% of drug spending. We also find substantial dispersion in insurer causal effects on health care spending and quantities for patients with diabetes, hypertension, and other chronic conditions. We find strong evidence for drug offsets as insurers who causally increase drug utilization also reduce medical costs and quantities overall and by condition. Finally, we find that employers do not select plans that reduce costs for their employees based on the match between employee conditions and estimated plan treatment effects, leaving significant cost savings on the table.
Does Medicaid Cover the Cost of Nursing Home Care? Variation By Ownership Status, Payer-Mix, and Staffing Level
John Bowblis et al.
Medical Care, January 2026, Pages 29-37
Methods: Per diem Medicaid payment rates were obtained directly from states. Estimated Medicaid per diem costs were calculated from Medicare Cost Reports, then combined with payment rates to calculate a payment-to-cost ratio. Medicaid payment rates and payment-to-cost ratios were examined by key facility characteristics: ownership, Medicaid payer-mix, and nursing staff levels.
Results: Nationally, the mean Medicaid payment rate was $198 per resident-day, while the mean Medicaid cost was $253. On average, Medicaid payment rates covered about 82 cents per dollar of estimated Medicaid costs in nursing homes in 2019. This figure declined to 76 cents in not-for-profit facilities. Most nursing homes (92%) had Medicaid per-diem costs that exceed Medicaid payments. Nursing homes with a greater share of Medicaid residents had Medicaid costs that better aligned with Medicaid payment rates. Furthermore, Medicaid payments covered a smaller share of Medicaid costs in nursing homes with the highest nursing staff levels compared with those with lower staffing levels.
When Safety-Net Programs Compete: Medicaid, 340B, And The Battle Over Drug Discounts
Sayeh Nikpay, Mikayla Reinke & Elizabeth Watts
Health Affairs, January 2026, Pages 54-62
Abstract:
The Medicaid Drug Rebate Program and the 340B Drug Pricing Program are generally understood as separate efforts to promote drug affordability -- one by directly subsidizing low-income patients through insurance coverage (Medicaid) and the other by indirectly subsidizing safety-net clinics and hospitals (340B). Yet they interact in ways that can unintentionally raise costs for Medicaid. This Policy Insight examines how this interaction occurs, introduces two policy strategies to mitigate the interaction, and summarizes the use of these strategies across states as of 2024. We conclude with recommendations for how policy makers can weigh the costs and benefits of states' efforts to preserve Medicaid savings against lost revenue for 340B-participating organizations.
Anatomy Of A Slowdown: Decomposing The Moderation In Health Spending Growth, 2009-19
Sherry Glied & Brendan Lui
Health Affairs, January 2026, Pages 29-38
Abstract:
National health expenditure growth between 2009 and 2019 slowed to less than half the historical rate of growth seen between 1970 and 2008. To identify why, we gathered actuarial projections of the fiscal effects of policies implemented between 2009 and 2019, netted these out from the 2009 Centers for Medicare and Medicaid Services baseline projections of national health expenditures, and decomposed the residual differences by payer and service to shed light on the spending slowdown. We identified four trends that contributed to spending growth below the baseline projections: declining utilization and substitution of lower-cost alternatives across hospitals, physicians, and pharmaceuticals; slow private hospital and physician price growth and the expanding scope of practice of nonphysicians in office-based settings; declining home health use among the oldest Medicaid beneficiaries; and slow growth in private insurers' administrative spending. Our results raise questions about several of the assumptions that underlay previous forecasts of future health care spending.
No margin, no mission? How emergency medical service crews attend to competing financial and social goals on 9-1-1 calls
Timothy Gubler, Haibo Liu & Alexandru Roman
Strategic Management Journal, December 2025, Pages 3118-3151
Abstract:
We study how autonomous Emergency Medical Service (EMS) teams prioritize competing financial and social goals during 9-1-1 calls. Prior research highlights organization-level solutions that enable single-goal pursuit, but it remains unclear how frontline professionals manage competing goals that are interdependent and inseparable during task execution. We argue EMS teams will dynamically prioritize goals across calls depending on contextual factors. Using quasi-random assignment of 9-1-1 patients to EMS crews in 31 US states, we find that crews prioritize the financial goal on private insurance calls but shift toward the social goal when agency financial need is low or call acuity is high. Surprisingly, these patterns are most pronounced in non-profit EMS agencies. Our study offers new insight into how professionals manage goal trade-offs in real time.
The Labor Market and Health Impacts of Reducing Cesarean Section Deliveries
Sarah Miller et al.
NBER Working Paper, December 2025
Abstract:
One in three births in the United States is delivered by cesarean section (c-section). This paper studies the labor market and health effects of c-sections, using newly linked administrative data that combines the universe of California birth records with mothers' quarterly earnings. We analyze the impact of an intervention that reduced c-section rates among low-risk first-time births, and find that mothers exposed to the intervention appear to have a higher likelihood of employment in the quarter following birth, as well as a higher likelihood of returning to their pre-birth employer. These impacts attenuate over time -- suggesting that a c-section primarily delays return to the labor market following childbirth -- but attachment to the pre-birth employer remains higher five quarters post-birth. We find no evidence of significant impacts on maternal or infant health, indicating that the intervention-induced decline in c-sections did not come at the cost of worse outcomes. Further, among mothers who have another child, we find that exposure to the intervention at the first birth leads to a lower likelihood of c-section and preterm delivery at the second one, implying that both the economic and health benefits of reduced c-sections may compound with birth order.
Rx-to-OTC Switch, Market Exclusivity, and Consumer Welfare: A Study of the US Anti-Ulcer Drug Markets
Debi Prasad Mohapatra & Yang Zhang
RAND Journal of Economics, Winter 2025, Pages 587-606
Abstract:
We study the US Anti-Ulcer Drug market, where market exclusivity is granted to the first over-the-counter (OTC) drug independent of prescription drugs' patent expiry. We show that due to the interplay of incentives in the prescription and OTC drug markets, compared to a world with no market exclusivity policy, the status quo design reduces consumer welfare by 1.6 billion USD, as it causes many firms to delay entry into the OTC drug market until prescription drug patents expire. An alternative policy linking OTC exclusivity provision to prescription drug patent expiry dates improves drug access and increases consumer welfare by 3.4 billion USD.