Tag: "Health Care Costs"

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.)

Read More » »

Nov 17, 2016 | 1 comment | by

GDP: Tame Health Spending Growth in Strong Third Quarter

BEAFor those (like me) concerned about how much health spending continues to increase after Obamacare, today’s flash report of third quarter Gross Domestic Product brings good news. Of course, the flash GDP report is subject to significant revision. Nevertheless, it is good to have a breather from the second quarter, which was dominated by growth in health services spending.

Overall, real GPD increased 2.9 percent on the quarter, while health services spending increased only 2.3 percent, and contributed only 9 percent of real GDP growth. Growth in health services spending was also in line with other services spending and personal consumption expenditures (PCE). Also, the annualized change in the health services price index increased by 1.6 percent, very close to overall GDP.

(See Table I below the fold.)

Read More » »

Oct 28, 2016 | 2 comments | by

CPI: Medical Care Prices Rose Less Than Non-Medical Prices in September

BLSThe Consumer Price Index rose 0.3 percent in September. Remarkably, medical prices rose a smidgen less, at 0.2 percent. This is a big breather from August, when increases in medical prices were dramatic. Nevertheless, both prescription and non-prescription drugs increased prices by 0.8 percent. Prices for medical equipment and supplies dropped by almost as much, shrinking 0.7 percent.

Over the last 12 months, however, medical prices have increased four times faster than non-medical prices: 1.2 percent versus 4.9 percent. Price changes for medical care comprise 27 percent of the overall increase in CPI.

Many observers of medical prices decline to differentiate between nominal and real inflation. Because CPI is flat, even relatively moderate nominal price hikes for medical care are actually substantial real price hikes. More than six years after the Affordable Care Act was passed, consumers are seeing no relief from high medical prices, which have increased over twice as much as the CPI less medical care since March 2010, the month President Obama signed the law.

(See Figure I and Table I below the fold.)

Read More » »

Oct 18, 2016 | 1 comment | by

PPI: Health Prices (Except Pharmaceuticals) Stay Tame As Other Prices Rise

BLSSeptember’s Producer Price Index rose 0.3 percent, a significant pick up. However, prices for most health goods and services grew slowly, if at all. Eleven of the 15 prices for health goods and services reported grew slower than the headline PPI. The major exception was prices for pharmaceutical preparations, which increased 1.2 percent, resuming a trend which I had hoped was breaking down. Further, prices of medicinal and botanical chemicals dropped 0.7 percent. So, price increases for pharmaceutical preparations are not coming from the ingredients.

However, over the last twelve months, prices of health goods and services have increased faster than overall PPI, which grew 0.7 percent. The tables are turned: 11 of 15 health categories experienced larger price increases than PPI did. Pharmaceutical preparations continue to stand out dramatically, having grown 8.1 percent. Nursing homes, for which prices rose 2.4 percent, might replace drug makers as the whipping boy for high health prices, but they have a long way to go.

(See Table I below the fold.)

Read More » »

Oct 14, 2016 | 2 comments | by

EpiPen Maker Lobbied U.S. Preventive Services Task Force

According to a report in the Washington Examiner, drug maker Mylan lobbied the U.S. Preventive Services Task Force to require insurers to pay the full price of EpiPens by deeming the drug delivery device a preventative measure. Under the Affordable Care Act, health plans must cover preventive services 100% without cost-sharing regardless of whether deductibles have been met. EpiPens are used by people with severe allergies who go into anaphylactic shock.  They are not used to prevent anaphylaxis, they treat the symptoms once it occurs. For example, under ACA regulations, a flu shot is a preventive medicine. Once you have the flu, seeing your doctor for Tamiflu would be a treatment, not a prevention.

Read More » »

Oct 13, 2016 | 3 comments | by

Government And The Cost Of Dental Care

UntitledIn July 2015, former Enron board member, New York Times columnist, and champion of ever more government control of health care, Professor Paul Krugman, wrote a disturbing blog entry:

Wonkblog has a post inspired by the dentist who paid a lot of money to shoot Cecil the lion, asking why he — and dentists in general — make so much money. Interesting stuff; I’ve never really thought about the economics of dental care.

But once you do focus on that issue, it turns out to have an important implication — namely, that the ruling theory behind conservative notions of health reform is completely wrong.

For many years conservatives have insisted that the problem with health costs is that we don’t treat health care like an ordinary consumer good; people have insurance, which means that they don’t have “skin in the game” that gives them an incentive to watch costs. So what we need is “consumer-driven” health care, in which insurers no longer pay for routine expenses like visits to the doctor’s office, and in which everyone shops around for the best deals.

Krugman goes on to insist dentistry is a consumer-driven market: Insurance is far less prevalent in dentistry than in medicine, and most dental care is routine and preventive. Yet, he points out, costs of dental care have risen at the same rate as those of other health care, not at the rate of other consumer goods and services.

Read More » »

Oct 10, 2016 | 15 comments | by

Is Pet Health As Dysfunctional as Human Health Care?

clemvet1Health policy analysts have long blamed the inefficiencies that befall the U.S. health care system to our over-reliance on third party payment. About 89 percent of all medical care is paid for by third parties — either employer-sponsored health plans, Medicare, Medicaid or individual medical insurance. Indeed, about 90 percent of the U.S. population have some type of health coverage. Thus, one could make a valid argument that medical markets devoid of insurance should function more like normal consumer markets. For instance, there is significant evidence that cosmetic medicine and corrective eye surgery both experience lower price inflation than medical care. These services are rarely covered by insurance. Another notable medical market that does not rely on insurance is veterinary medicine.

Read More » »

Oct 03, 2016 | 8 comments | by

GDP: Health Services Grew Almost 12 Times Faster Than Non-Health GDP

BEAThe media noted today’s third estimate of second quarter Gross Domestic Product was revised upward from the second estimate. It was a sharply revised estimate of health spending that led to the higher overall estimate. While the estimate of GDP was revised up by $12.9 billion, the estimate of health services spending was revised up by $16.2 billion. Spending on services other than health services was revised down.

In real (inflation-adjusted) dollars, services grew 2.9 percent (annualized, seasonally adjusted) from the first quarter. As a large component of services, health services grew 7.1 percent.  While real GDP growth was 1.4 percent, once health services is stripped out, non-health GDP grew just 0.6 percent.

See Table I below the fold:

Read More » »

Sep 29, 2016 | 3 comments | by

A Modest Proposal To Reduce The Price of EpiPens

Epipen(A version of this Health Alert was published by Forbes.)

Posturing politicians on Capitol Hill conducted a hearing a few days ago, in which they grilled Heather Bresch, CEO of Mylan. N.V., which makes EpiPens. Prices of EpiPens have skyrocketed in the last few years. According to Aaron E. Carroll, writing in the New York Times, the real (inflation-adjusted) price of EpiPens has risen 4.5 times since 2004.

The politicians were more interested in wagging their fingers and tut-tutting at Ms. Bresch for the amount of money she has made, than actually figuring out a way to lower the price of EpiPens. (By the way, Ms. Bresch testified she has no intention of reducing prices in response to their badgering.) 

Read More » »

Sep 28, 2016 | 22 comments | by

Medicare Accountable Care Organizations Continue to Underwhelm

Confident DoctorsMedicare’s Accountable Care Organizations (ACOs), which launched in 2012, were supposed to introduce a significant shift away from paying for “volume” to paying for “value.” Critics of Fee-For-Service medicine claim this system causes physicians to do more to patients so they get paid more, notwithstanding benefits to patients. Those critics seldom identify the moral hazard associated with third-party payment (by insurers or governments) as a cause of too many medical tests or procedures.

So, they introduced ACOs, which would increase quality and cut costs by getting rid of straight Fee-For-Services and putting more financial risk on physician groups. If the physician groups pass certain thresholds of cost and quality, they can pocket some of the savings. The 2015 results for Medicare’s ACOs have been reported, and the results are underwhelming:

Read More » »

Sep 19, 2016 | 16 comments | by
« Previous Page — Next Page »