Beyond the Cost Curve: Rethinking Health Care Sustainability
Health care accounts for nearly one-fifth of the US economy, and national health expenditures are projected to exceed 20% of gross domestic product by 2033. After decades of alarm about runaway costs, a growing body of evidence indicates that the nation has experienced a sustained slowdown in spending growth relative to historical trends and earlier projections. Whether the US has truly “bent the cost curve” has become a central question in health policy.
The authors argue that this framing is too narrow. As they note, “spending growth is only one dimension of sustainability.” Spending levels and the distribution of financial burden matter just as much. Over the same period in which growth slowed, the gap between what the US spends, what patients can afford, and the population health outcomes achieved has widened. Recent increases in spending also suggest the slowdown may not persist. In this context, the authors contend that “the critical question for policymakers is not whether but how” spending growth will be constrained, and they identify five interconnected forces that will shape the answer.
Force 1: Slower Spending Growth Can Coexist With Worsening Affordability
How Spending Was Restrained
Aggregate expenditures reflect prices, service volume, and the number of people covered. Growth can therefore be slowed through efficiency and lower prices, or through changes in enrollment, eligibility, benefits, and cost sharing. Medicare growth slowed during the 2010s largely through payment reforms. In the private sector, however, restraint has increasingly come from higher deductibles and cost sharing, shifting costs onto patients.
The Burden on Patients
The consequences are measurable. Nearly half (44%) of US residents report difficulty affording health care, and 36% have delayed or skipped needed care because of cost. Evidence shows that higher cost sharing and reduced coverage lower spending primarily because patients use less care, including high-value and necessary care.
Current Policy Direction
The policy changes with the largest projected effects, including stricter Medicaid eligibility requirements and the scheduled expiration of enhanced Affordable Care Act premium subsidies, continue this pattern. They are likely to slow spending but do not distinguish between high- and low-value care, and they disproportionately shift risk onto lower-income patients and those with greater health needs.
Force 2: Consolidation and Financialization Sustain High Prices
Market Power and Pricing
High prices remain the primary reason the US outspends peer nations. Consolidation, both horizontal (mergers of similar practices or facilities) and vertical (such as hospitals acquiring physician practices), is a key factor. Vertical integration can let health systems capture referral streams and steer patients toward higher-priced sites of care. Evidence that consolidation produces efficiencies passed on to patients or purchasers remains limited. Commercial prices now average 2 to 3 times Medicare rates, and that gap is expected to widen.
The Role of Investors
Financialization has increased investor influence across hospitals, physician practices, and nursing homes. Investor ownership has been associated with higher spending, with mixed effects on quality and outcomes.
Emerging Responses
Calls are growing for tighter merger scrutiny and limits on private equity. Several states are exploring caps on commercial hospital prices, an approach similar to the negotiated fee schedules and price guardrails used in Germany, the Netherlands, and Switzerland.
Force 3: Intensity Is an Increasingly Important Driver
Recent spending acceleration reflects rising utilization and, notably, intensity: the resources devoted to each episode of care. Patients with the same condition may encounter different combinations of clinicians, technologies, settings, and services, and coding changes can raise measured complexity without changing the services delivered.
The authors caution that “greater intensity is not synonymous with greater value.” Some increases reflect genuine clinical progress; others reflect costlier settings or services that do not improve health. Tools such as prior authorization and value-based payment can curb unnecessary use but struggle to separate beneficial intensity from costly intensity. Many high-income countries rely on health technology assessment, expenditure targets, and benefit design to address this.
Force 4: Fragmentation Undermines Policy Impact
A Mismatch Between Problems and Solutions
US health care financing is unusually fragmented. Even multipayer systems abroad typically coordinate decisions on prices, coverage, and risk pooling. In the US, systemwide cost drivers are addressed program by program. While Medicare payment policy constrained public spending, commercial prices kept rising, producing divergent trends across Medicare, Medicaid, commercial insurance, and household spending.
Limits of State Initiatives
Most state price regulation applies only to commercial hospital prices for a subset of residents, often state employees. This leaves much spending outside regulation and preserves incentives to shift prices across payer markets. Similarly, policymakers often expand subsidies to help patients cope with high costs rather than addressing the conditions that generate them.
Force 5: Artificial Intelligence Will Amplify Existing Incentives
Utilization and Coding
Whether AI reduces or increases spending depends on the incentives surrounding it. In fee-for-service environments, organizations may use AI to detect chronic conditions earlier and more often or to enhance diagnostic coding and reimbursement. Only systems rewarded for efficiency and value have strong reasons to use AI to reduce low-value care.
Productivity Is Not Savings
Experience with electronic health records shows that productivity tools carry substantial implementation costs. The authors warn that “AI may therefore redistribute spending as much as reduce it,” moving dollars toward vendors and data infrastructure. Fragmented oversight raises the risk that AI reinforces consolidation and financialization rather than improving access.
Implications for Physicians and Health Care Leaders
The past decade shows spending growth can be moderated, but “slower spending growth alone is not synonymous with affordability or population health.” Incremental reforms to cost sharing, benefit design, payment policy, and prior authorization can moderate spending within programs but are unlikely to suffice. The authors argue the next decade must directly address prices, market power, resource allocation, and incentives. Without such reforms, the nation will face a recurring choice between devoting more resources to health care or accepting declining affordability and access.
For private practices and clinical leaders, these forces carry practical weight: payer price pressure, consolidation dynamics, scrutiny of coding intensity, and the incentive structures that will govern AI adoption. Sustainable health care, the authors conclude, is ultimately defined by whether resources are directed toward improving health and enabling affordable access.
