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Real-time Health Care Inflation

By June 16, 2023Commentary

Thinking about health care inflation and health spending made me decide it was time for another look at the Altarum Institute’s regular briefs on those topics.  Altarum offers a more real time look at where inflation, spending and utilization are.  Inflation, or the change in medical prices, is the one I look at first, since it is a substantial factor in overall inflation.  The headline on the price brief pretty much says it, prices accelerated in April, while overall inflation was declining.  The health care price index rose by 3.4% year-over-year, up from 2.9% in March. This was the fastest health care price growth since December of 2007.  Private insurance prices rose 4.1%, Medicaid ones by 4.9% and Medicare, which is set by the government, only 1.1%.  At some point Medicare will be under immense political pressure to raise its prices, which will further accelerate private prices.  Nursing home and dental prices rose fastest at 7.1%, while physician increases were the lowest, at .7%.   Difficulty with staffing at nursing homes, resulting in much higher labor costs, likely explain the nursing home price increases.  (Altarum Briefs)

On the spending side, March year-over-year growth in national health spending was 5.4%, but in what is most relevant to consumers, spending on actual medical care, the increase was 7.2%.  The highest growth in spending was for nursing home care at 12%, prescription drug spending at 10% and hospital care at 7.3%.  Taking price and spending trends together, one can infer utilization changes, which were 4.3% year-over-year with drugs and nursing home care seeing the greatest rise in use.  No matter what goofy method is used in the national inflation statistics, the reality is that consumers are seeing higher medical costs, with the price increases accelerating and factors in place that are likely to increase that acceleration.

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