Medical Spending From Ancient Times to the 21st Century

Abstract

The historical record of medical expenditures over 3,800 years from the Code of Hammurabi to the current OECD Health Data Set is used to illustrate and analyze long-run trends. Scientific and industrial revolutions, demographic transition, urbanization, nationalism, professional organization, institutions, and insurance are seen to be necessary preconditions for the growth of national health expenditures. Modern health systems are both technologically dynamic and fiscally inertial. Country trends from 1960 to 2018 are illustrated graphically, providing a framework for macroeconomic extrapolations that can be used to make forecasts for decades 2030+. The most rapid expansion usually occurred during the 1960s, with medical costs rising more than +3% per year faster than national incomes. After 1975 excess growth moderated in most high-income developed countries, and since 2000 has averaged less than +1% annually. This long-run temporal pattern resembles the S-shaped exponential growth curves characteristic of many biologic and economic processes, having an inflexion point where rates peak and then slowly decelerate. Appendices and related articles provide context for this historical review with more detailed examination of the international development of national health accounting methods, measurement boundaries, comparability, and data sources, and an extended national case study of the USA from 1776 to 2026.