Fourth Month of Healthcare Price Inflation; Longest Trend since January 2012
The Altarum Institute’s latest Price Brief shows that prices of healthcare goods and services are rising:
In June 2014, the health care price index (HCPI) rose 1.7% above June 2013. The 12-month moving average of 1.3% is near the all-time low for our data (1.2%), but it has now risen for four straight months, the first increasing trend since January 2012.
Although healthcare price inflation is hardly out of control, it is still outpacing general inflation. In the year to June 2014, the Altarum Institute’s Health Car Price Index (HCPI) rose 0.2 percentage points higher than the Gross Domestic Product Deflator (GDPD). In the year to June 2013, on the other hand, the HCPI rose 0.5 percentage points less than the GDPD. The brief continues:
These numbers are quite low by historical standards, but it appears that we are slowly moving beyond this recent and rare episode of health care prices growing more slowly than economy-wide prices.
During the recession, hospitals (who usually use private payers to offset less lucrative public payers) faced pressure to hold prices in check. This was a recession and they knew money was tight for everybody. Likewise, medical equipment manufacturers and suppliers had to hold the line on prices. Just as workers are now demanding pay raises that they didn’t get during the recession, hospitals, medical device makers and medical suppliers are also more able to increase prices.
The real question is whether inflation in healthcare is growing faster than was projected without the ACA.
Very tough to figure out. My own thesis (expressed in this blog) is that Obamacare indirectly reduces the rate of health spending because it directly reduces the rate of economic growth.
Because healthcare is a superior good, people cut back consumption in bad times.