Indifference Curves - Medical Costs

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Over the past decade, medical costs have increased more rapidly than other consumer costs. Americans spent 2.5 trillion on health care in 2009 according to Medicare’s Office of the Actuary. That figure translates into approximately $8,086 per person, or 17.6 percent of the nation’s gross domestic product (GDP).1 Health care costs more than tripled from 1990 to 20092 and are projected to rise to 19.6 percent of GDP in 2019.3

“The 4 percent increase from 2008 levels represented the slowest rate of growth in 50 years of measuring national health care spending. Much of that was the consequence of people losing jobs that came with health insurance. The recession had an impact on total health care spending in 2009. Many consumers decreased their use of health care goods and services partly because they had lost employer-based private health insurance coverage, and partly because their household income had declined.”4

Medical Cost Trends
Two important trend reports were released in May 2011. PriceWaterhouseCoopers (PwC) Health Research Institute’s “Behind the Numbers: Medical Cost Trends for 2012” examined the medical costs for employers in 2012 and Medco’s “Drug Trend Report” looked at prescription drug prices and utilization trends. The following are highlights from each report5:

PwC’s “Behind the Numbers: Medical Cost Trends for 2012” survey was completed during the first quarter of 2011. Survey participants included 1,700 companies from the United States spanning 32 industries. •Medical costs - expected to rise from 8 percent in 2011 to 8.5 percent in 2012. •Provider consolidation - hospitals and physicians are aligning through mergers, acquisitions and other arrangements. •Cost shifting - reduction in Medicare and Medicaid payments have forced the private sector to make up the difference. •Post-recession stress – stress from money, work and economy woes are taking a toll. More claims for stress-induced illnesses (i.e....
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