CPI: Medical Price Hikes Match Inflation

 

BLSBoth the Consumer Price Index and the price index for medical care rose just 0.1 percent in February. This is the sixth month in a row we have enjoyed medical price relief in the CPI. Even prices of prescription drugs dropped by 0.2 percent. Some components – medical equipment and supplies, outpatient hospital services, and health insurance jumped a bit, but not enough to drive overall medical prices higher. Medical price inflation contributed nine percent of CPI for all items.

Over the last 12 months, however, medical prices have increased much more than non-medical prices: 3.5 percent versus 2.7 percent. Price changes for medical care contributed 11 percent of the overall increase in CPI.

More than six years after the Affordable Care Act was passed, consumers have not seen relief from high medical prices, which have increased over twice as much as the CPI less medical care since Obamacare took effect.

See Figures I, II, and Table I Below the fold:

Read More » »

Print Friendly, PDF & EmailPrint
Mar 15, 2017 | 1 comment | by

Health Insurance A Cause Of Past-Due Debt?

 

credit-card-2A study of past-due medical debt by Michael Karpman and Kyle J. Kaswell of the Urban Institute demonstrates the expansion of coverage subsequent to the Affordable Care Act is associated with a reduction in the proportion of adults with past-due medical debt.

In 2012, 29.6 percent of U.S. adults had past-due medical debt, versus just 23.8 percent in 2015. The study does not define “past-due,” nor the average amount of medical debt that is past-due. However, it cites research that almost half of debt in collections is owed to hospitals and other providers.

Although health insurance is supposed to protect us from such a situation, it often does not. Among insured people, 26.6 percent had past-due medical debt in 2012, versus 22.8 percent in 2015. However, among uninsured people it declined more: 39.8 percent in 2012, versus 30.5 percent in 2015. What to make of this?

Read More » »

Print Friendly, PDF & EmailPrint
Mar 15, 2017 | 3 comments | by

PPI: Health Prices Mixed, Inflation Low

 

BLSFebruary’s Producer Price Index rose 0.3 percent. However, prices for many health goods and services grew slowly, if at all. Nine of the 16 price indices for health goods and services grew slower than their benchmarks.* Prices for medical lab and diagnostic imaging actually deflated in absolute terms.

Even  pharmaceutical preparations for final demand, for which prices increased most relative to their benchmark, increased by just 0.4 percent. Although 0.3 percentage points higher than the price change for final demand goods less food and energy (0.1 percent), this is still tame relative to the trend of pharmaceutical prices. Among services for final demand, only price for health insurance and nursing homes rose higher than their benchmark.

With respect to diagnosing whether health prices are under control, the February PPI is about as mixed as January’s was.

See Table I below the fold:

Read More » »

Print Friendly, PDF & EmailPrint
Mar 14, 2017 | 1 comment | by

Pharmaceutical Profits And Capital Markets

 

captureAn interesting research article at the Health Affairs blog asserts there is no relationship between high U.S. prescription drug prices and drug companies’ research and development budgets.

The authors point out that U.S. prices for patented prescription drugs are significantly higher, in real dollars, than prices in other developed countries. (Most observers claim this is because foreign governments impose price controls. I think it is more attributable to price differentiation due to variation in national income per capita.)

The point of the article is to debunk the argument that research-based drug companies must earn high profits if they are going to reinvest in R&D. While the data are correct, the article misunderstands the nature of capital markets.

Read More » »

Print Friendly, PDF & EmailPrint
Mar 13, 2017 | 2 comments | by

Slow Growth, Downward Revisions in Health Jobs Continue

 

blsFor the second month in a row, the Employment Situation Summary showed a slowing down in the growth of jobs in health services versus non-health jobs, relative to recent history. Further, revisions to data in this morning’s very strong jobs report indicate high job growth reported in health services for December and January were not correct.

Health jobs increased only 0.17 percent in this morning’s jobs report, versus 0.16 percent for non-health jobs. With 27,000 jobs added, health services accounted for 11 percent of new nonfarm civilian jobs.

This continues a welcome development. The previous disproportionately high share of job growth in health services was a deliberate outcome of Obamacare. If this trend persists, it will become increasingly hard to carry out reforms that will improve productivity in the delivery of care.

Ambulatory sites added jobs at a much faster rate than hospitals (0.25 percent versus 0.12 percent). This was concentrated in physicians’ offices and home health. This is a good sign because these are low-cost locations of care.

See Table I below the fold:

Read More » »

Print Friendly, PDF & EmailPrint
Mar 10, 2017 | Leave a Comment | by

QSS: Good Growth In Health Services Revenue

 

Census2This morning’s Quarterly Services Survey (QSS), published by the Census Bureau, showed good revenue growth across health services, except for specialty hospitals. Overall, revenue grew 4.2 percent in the fourth quarter. Further, growth versus Q4 2015 was a strong 6.9 percent and YTD growth is up 5.9 percent. Only specialty (except psychiatric and substance abuse) hospitals showed a decline. Revenue at outpatient care centers has grown 10.5 percent, Q4 2016 versus Q4 2015, a remarkable growth which hopefully reflects a change in location of care to lower cost settings versus hospitals. Although, hospitals’ revenues still grew a healthy 7.5 percent.

See Table I below the fold:

Read More » »

Print Friendly, PDF & EmailPrint
Mar 09, 2017 | Leave a Comment | by

Every State Must Close Obamacare’s Special Enrollment Loopholes

 

Obamacare-protest-AP(A version of this Health Alert was published by Forbes.)

So, the Republican Repeal-and-Replace Obamacare train has finally left the station. Although free-market health reformers are divided on the merits of the American Health Care Act, as introduced by the Energy & Commerce and Ways & Means Committees of the U.S. House of Representatives, no-one can deny the Republicans have kept their promise to take up health reform as their first order of legislative business.

However, new legislation takes a long time to get to the President’s desk. Meanwhile, the Trump Administration has the unenviable task of enforcing a law they know harms Americans. They are doing the best they can to offer relief through administrative rule-making.

On February 17, the Centers for Medicare & Medicaid Services proposed a new rule to address one reason why Obamacare premiums jumped 25 percent this year: The exchanges attract too many sick people and not enough healthy people. This is called a death spiral; and one reason it occurs is the Obama Administration allowed people to jump in and out of the exchanges too easily.

Read More » »

Print Friendly, PDF & EmailPrint
Mar 08, 2017 | 98 comments | by

Replacing Obamacare with A Means-Tested Tax Credit

 

HSAIn his joint address to Congress last Tuesday, President Trump promoted the idea of a tax credit to support people’s purchase of health care. This is in line with the approach taken by Secretary Tom Price when he was in Congress, and that of the House Republican leadership.

Some self-styled conservatives oppose a refundable tax credit because it would cost taxpayers a lot of money. That which we currently understand to be the Republican replacement bill would offer a tax credit to individuals based on age but not on income, if they do not get employer-based health benefits.

That may be changing to a means-tested tax credit in order to win the support of conservative Republican lawmakers. “Oh, the irony,” exclaims one journalist: Don’t those Republicans know Obamacare contains means-tested tax credits? It’s still Obamacare-Lite!

No, it would not be.

Read More » »

Print Friendly, PDF & EmailPrint
Mar 06, 2017 | 89 comments | by

Medical Drug Tourism: An Odd Byproduct of High Drug Prices

 

Capture14On numerous occasions President Trump has lambasted drug companies for their high drug prices. He has suggested on more than one occasion Americans should be allowed to import medications from abroad where they are cheaper. Allowing private citizens to import their own drugs is a form of arbitrage. Arbitrage is when people are able to take advantage of discrepancies in prices in two different markets and bypass the higher prices by purchasing the lower-priced product in a cheaper market. For instance, you could argue that buying from Amazon is a form of arbitrage to avoid paying higher prices at your local brick & mortar store.

Read More » »

Print Friendly, PDF & EmailPrint
Mar 03, 2017 | 11 comments | by

Why Do Late Middle-Aged Women Allow Obamacare To Gouge Them?

 

Women joggingIn February, Professor Mark Pauly of the Wharton Business School wrote a short article proposing reforms to individual health insurance, in which he reminded us the biggest premium hike in the market for individual insurance consequent to Obamacare was among women in their 60s. The actual research was published in 2014, but I have wondered about it ever since.

Obamacare prevents insurers from charging premiums for 64-year olds that are more than three times those charged to 18-year olds. (A multiple of about five would be fairer, according to actuaries’ consensus.) Intuition tells us that should reduce premiums for older people. That intuition is wrong. Nevertheless, if politicians can convince people it is true, it makes political sense to impose the rule, because older people are much more likely to vote than younger people.

Read More » »

Print Friendly, PDF & EmailPrint
Mar 02, 2017 | 33 comments | by
« Previous Page — Next Page »