Health spending and medical care prices typically outpace growth over the overall economy, but as of mid-2022, inflation rates of the economy have reached a four-decade high.
Prices for consumer goods and services have surpassed growth levels in medical care prices — which, historically, has rarely been the case.
Health spending and medical care prices typically outpace growth over the overall economy, but as of mid-2022, inflation rates of the economy have reached a four-decade high. Though rates of health services remain to be increasing, consumer goods and services have increased at a much faster rate, according to a recent KFF analysis.
With use of consumer price index (CPI) data, overall economy prices grew by 6% this February compared to last year. Prices for medical care only increased by 2.3%.
Overall, the value of medical care has increased by 115.1% in 23 years. The value of consumer goods and services has bumped up by 78.2% in the same amount of time.
To collect this data, Bureau of Labor Statistics (BLS) data, including CPI and producer price index (PPI), were used.
Contributing to the record-breaking inflation of the economy are a number of essential goods and services. For example, food prices grew by 9.5% and electricity prices grew by 12.9%. Rent has seen larger price increases and gasoline was the fastest-growing essential household expense last year, reaching a peak inflation rate of 59.9% in June.
Inflation in medical care includes hospital and related services by 4% — inpatient by 3.4% and outpatient by 3.6% — and nursing homes at 6.2% increased faster than prices for prescription drugs by 2.4% and physician services by 1.2%.
What's in the future is up in the air as far as tackling inflation rates, but Melissa Andel suspects one thing for certain: prescription drug price negotiations could stir things up for the market once prices are announced a few months before the 2024 presidential election.
In a previous interview with Andel, principal of CommonHealth Solutions LLC, she suspected drug prices could either be negotiated at maximum fair price or below the maximum if they are negotiated at all.
The Inflation Reduction Act of 2022 permits Medicare to negotiate for prescription drug prices and extend the expanded Affordable Care Act program for three years.
In the fight of inflation, the bill will make a "historic down payment" on deficit reduction. This includes investing in domestic energy production and manufacturing, and reducing carbon emissions by roughly 40% by 2030.