PPI: Health Prices Tame, Inflation Flat

BLSOctober’s Producer Price Index was flat. However, prices for most health goods and services grew slowly, if at all. Seven of the 15 price indices for health goods and services declined. The major exception was prices for dental care, which increased 1.5 percent. Dental care is dominated neither by government nor private insurance, so dental price increases are not explained by NCPA’s usual theory of health inflation. I addressed dental price increases in a previous article.

Prices of pharmaceutical preparations for final demand increased 0.4 percent, but that was in line with all goods for final demand. Prices for construction of both health facilities and other buildings increased 0.7 percent. This bears closer watching as President-elect Trump promises more spending on infrastructure, including hospitals.

Prices of health goods for intermediate demand, especially medicinal and botanical chemicals, and biological products, actually dropped. Perhaps this will flow through to prices of pharmaceutical products but that has not previously been the case.

Over the last twelve months, prices of health goods and services have increased faster than overall PPI, which grew 0.8 percent. The tables are turned: 12 of 15 health categories experienced larger price increases than PPI did. Pharmaceutical preparations continue to stand out dramatically, having grown 8.4 percent.

(See Table I below the fold.)


Comments (1)

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  1. Ronald Greiner says:

    John, President Trump said that in AZ the cost of health insurance is going up 116% on 1/1/2017. The Governor in MN said his state is going up 58% and the Affordable Care Act (ACA) is un-affordable, and he is a Democrat ha ha.

    I guess that PPI has nothing to do with the skyrocketing cost of health insurance since the Democrats rammed Obamacare down our collective throats without one Republican vote.

    These crazy Democrats think that keeping the age of 26 before you lose your insurance is a good thing. Trust me, if your daughter gets MS, like mine, she will turn 26-year-old. Before Obamacare my clients didn’t have their children cancelled at a majority age. We had a Dependent Conversion Privilege (DCP) without medical under-writing. It is crazy what the free markets will do without government mandates because of the POWER of competition.

    I just train the agents to say, “Come on. You have to switch to me because you have children. Don’t gamble with some loser company because your child can become sick or hurt. I’m not going to fast for you am I?”

    You have to train agents to always end in a question.