For the hundredth time I will say that prices for medical goods and services are accelerating and will be a major factor in continuing high inflation, particularly in 2024, no matter what goofy way the BLS chooses to measure it. Health inflation lags, due to contracting cycles, but the underlying cost pressures are there and will accelerate. A new report from PriceWaterhouseCooper’s Health Research Institute validates this concern. Most employer health plans renew on January 1, but the work of identifying likely cost trends that need to be reflected in benefits begins and must be finished in the prior summer, so people are thinking now about what prices and premiums will look like in 2024. PWC’s answer is about 7% growth, which is up from 6% for 2023. (PWC Report)
Specialty drugs continue to be a heavy contributor to the higher costs, with the average cost for new ones being over $200,000. Generic specialty drugs are coming and may lower some prices, but the flood of new drugs coming to market will keep overall spending increasing rapidly. Another major factor is the very substantial wage pressure on hospitals and other providers, which have experienced staff shortages and burnout, particularly during and in the aftermath of the epidemic. As is usual from consultants this report and associated work from PWC is high on talk about cost containment and innovation, blah, blah, blah; but the reality is that health care spending is going to keep marching higher and higher.