Price inflation has been a major contributor to the rise of health care costs in the recent decades. This inflation has been due to:

Question

Options

• APrices of health care rising more rapidly than prices in the overall economy.
• BAn increase in the quantities of health care utilized relative to increases in the overall quantity of
• CBoth A and B
• DFactors other than price or quantity of health care.

• B
  2% (1)
• C
  95% (41)
• D
  2% (1)

Explanation

Option C is correct because health care cost inflation has been driven by both price and quantity factors simultaneously. Health care prices have risen faster than general inflation (making A true on its own), but utilization - the sheer volume of services consumed - has also expanded dramatically due to aging populations, new treatments, and insurance-driven demand (making B true on its own). Since both phenomena have independently contributed to rising costs, neither A nor B alone captures the full picture.

Why the distractors fail:

• A alone is incomplete - ignoring quantity growth understates the problem.
• B alone is incomplete - ignoring price growth does the same.
• D is wrong because price and quantity are the dominant drivers; attributing the rise to "other factors" dismisses the well-documented evidence.

Memory tip: Think of the cost equation: Cost = Price × Quantity. If costs rise, it's because price went up, quantity went up, or both - and in health care, both levers moved, so the answer is always C.

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