State health care spending growth benchmarks have become a major state-based initiative for cost containment. Nine states now set explicit targets, and since 2021 nearly every one has reported missing them, often by wide margins, prompting claims that the rising cost of health care was unsustainable.
My recent article in Health Affairs shows that these benchmarks largely do not account for changes in inflation. The benchmarks were largely designed during a period of low and stable inflation. However, inflation spiked after 2020.
Across six states with performance data for both years, meeting the 2022–23 benchmark would have required real per capita spending to fall by an average of 1.6 percent per year. Under counterfactual 1.5% inflation — the 2010–20 average — the same targets would have allowed a 1.9% increase.
Health care’s share of these states’ economies barely moved: 10.8% of GDP in 2019, 10.9% in 2021, 10.7% in 2023.
How can states respond? Options include reporting real spending performance alongside nominal, comparing spending growth against actual long-term economic growth, and specifying inflation-shock triggers before taking enforcement actions.
More details in: Ericson, Keith. 2026. “Inflation Distorted State Health Care Spending Benchmarks: Nominal Growth Targets Called For Real Spending Cuts, 2022-23” Health Affairs. Open Access PDF here.
Keith Marzilli Ericson 