Year of Publication



Martin School of Public Policy and Administration

Executive Summary

Total personal health care costs are increasing in the United States every year. Currently personal health care costs are predicted to increase at a national average rate of 6.5 percent. This is on track with the historical data. The increase has returned to the 6.0 percent mark after falling down to an increase of 3.7 percent in 2013. Recovering from the recession and the implementation of the Affordable Care Act has contributed to the steady increase back up to the average 6 percent increase per year. When looking at individual states, all averaged around the 6 to 8 percent increase per year from 2003 - 2009, which fits on trend with the national data. It is likely that the states are again up to the 6-8 percent annual increase in total personal health care expenditure.

This capstone examines the factors that affect state healthcare costs. The primary variables of interest in this study include environmental air pollutants, which could be having an effect on health care costs based on state emission levels. The EPA and other literature have cited that exposure to these air pollutants may have an adverse effect on citizen’s health. If citizens have declining health, it would lead to increased health care costs. To test this possibility I run a multiple-regression of panel data with fixed effects for air pollutants and health care costs, while controlling for other explanatory variables. Findings indicate that air pollutant emissions have no effect on total personal health care costs by state.

The only statistically significant variable in the model is the proportion of obese residents in a state. The fixed effects model show s the changes in the obesity percentage in relation to the change in the health care costs. States with a higher obesity percentage spend more on healthcare. The model also includes a graph of the United States, using their Federal Information Processing Standards, which ranked states depending on how much they spend above or below the normal rate on health care, relative to their GDP. The ranking showed New England states spent above relative to GDP and southern states spent less. The ability to analyze data on a twenty to thirty year basis may have produced different results relative to the question.