Health care cost increases moderating-trend or blip?

You will hear press reports of moderating increases in health insurance premiums. Don’t become too excited, it’s not a trend but rather a cycle.

There are several things going on here. First, anytime there has been talk or action on reforming healthcare, costs have (temporarily) moderated. This reaction goes back decades. Second, the recession and the accompanying squeeze on personal resources moderates demand for services. Third, employers continue to raise deductibles, co-payments and the employee share of premiums.

All these factors impact the use and cost of services. However, at some point the maximum impact is reached and costs will rise again at more than the rate of inflation. Nothing substantive has changed and in fact the PPACA has added costs for the private sector.

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