Why Inflation Will Stay High

Well, there are a lot of reasons, starting with the deficits and debt that will keep interest rates up, and that is itself a form of inflation.  But health care costs are a big reason.  Today the local toilet paper source, the StarTribune, has an article about Blue Cross seeking a 10% premium increase for next year.  I suspect this is typical.  Larger employers may be able to negotiate these increases down somewhat, but the reality is that weight loss drugs, cell and gene therapies, specialty drugs, the epidemic of mental illness and drug addiction and other factors are driving health spending upward and that has to be reflected in health insurance premiums.  This fall people will begin to see the impact of that, as employers pass at least some of that increase on to workers in the form of premium contributions.  And no matter how screwed up the method is used to calculate the impact of health care prices on inflation, in the real world people will be very aware that they are paying more.  So watch out for health care insurance and health care costs.