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More Evidence of Health Care Inflation

By September 16, 2023Commentary

The large benefits consultants who advise employers on their health care plans for employees have consistently warned of higher costs in this year and the next year.  Mercer has weighed in with expectations of 5% plus health plan cost inflation for 2023.  This was very predicatable because the epidemic has caused substantial cost of doing business increases for health care providers, including labor and supply costs, and those providers will feel a need to pass those increases along to health plans.  Providers generally have the market power to aid them in doing so.  Drug companies can always be counted on to rapidly raise their prices.  When health plans pay more for services and goods from health care providers, they have to increase premiums or risk losing money.  So both the raw prices for health care services and the health plan premiums are rising.  The official inflation numbers account for this in goofy ways, but sooner or later it has to be recognized and it is a significant cost for many Americans.  The underlying health care inflation also affects government spending in Medicare and Medicaid, further increasing our deficits.  (Mercer Survey)

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