Opinion: Why haven’t health care cost increases exceeded inflation? There’s a very good reason

All Americans are worried about inflation. The prices for housing, clothes and food at the supermarket are eyepopping and threatening President Biden’s re-election. But there is one totally unexpected exception to inflation recently: health care.

For decades the growth in health care spending in the U.S. exceeded overall inflation — until relatively recently. With the exception of 2020 and the Covid cost spike, health care costs have remained at or below 18% of GDP since the enactment of the Affordable Care Act in 2010. This has been the longest stretch of no-cost-growth since at least 1965 and the enactment of Medicare and Medicaid. These overall numbers have been reinforced by reports that Medicare’s spending per person has been flat for more than a decade, and recent data showing that premiums for private employer-sponsored insurance have been increasing at 3.7% in the past decade, which is much slower than the 8.4% between 1999 and 2011.

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