Health industry offer mirrors previous trend

The health industry's offer Monday to slow the rise in health care costs mirrors a trend we've seen before; health inflation moderating at the threat of government intervention.

Insurance and pharmaceutical companies, doctors and hospitals are offering to trim about a quarter of the annual rise in health care costs if Congress will include them in talks on health care reform legislation.

At the current inflation rate of a little more than 6%, a 1 and a half percentage point reduction would return the rate of health care inflation close to what it was in 1993, when former President Clinton launched his reform effort.

The rate of health care inflation had been in the double digits before that and it began rising after the Clinton administration's effort failed, reaching its most recent peak of 9% in 2002.

It has been falling since then, but even at 6% annual increase health costs would consume a staggering 21% of the nation's Gross Domestic Product 10 years from now.

That's up from 15% of GDP in 2006 and just 7% of GDP in 1970. Administration officials say trimming the annual rate of increase to 4.5% would save $2 trillion a year.