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Health Care Costs Article

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While health spending has been growing, it is growing at a stunted rate. The Office of the Actuary (OACT) in the Centers for Medicare and Medicaid Services reports that national health spending grew by 3.9% each year from 2009 to 2011, the lowest rate of growth since the federal government began keeping such statistics in 1960 (The Kaiser Initiative on Health Reform and Private, 2013). By 2012 spending increased only another .4% to 4.3% increase.

The question(s) remain: what are the causes in this resulted stunt in growth?
Several factors explain, though do not completely quantify the reasons: 1. Economic Downturn and Inflation – consumers spend less on health care as their income lags and individuals cut back on services and goods. 2. Growth in Gross Domestic Product (GDP) – recession periods lead to organizations providing less health care benefits; fewer people employed and insured.

Despite the fact that the aforementioned variables explain over 85% of the disparity in health spending growth rates from 1965 through 2011 (The Kaiser Initiative on Health Reform and Private) the effects are still cumulated in a “lagged” response, meaning that the changes are slow to develop. Explanations are provided to better ascertain the reasons behind these lagged responses that include: * Most people are insured, and insurance has an economically protective effect in shielding people from the full cost of health care. * Consumers may perceive health care as a necessity in a way that is different from other economic goods, and therefore cut back on health spending only after exhausting other ways of trimming household budgets. * Employers may not make immediate changes to health benefits in response to changes in GDP. * Hospitals (which account for a large share of health spending) are quite deliberate in their decision-making processes

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