Tag: "inflation"

Is Health Inflation Really Quite Tame?

increaseI sometimes feel the odd man out when addressing inflation in U.S. health care. I discuss the monthly Consumer Price Index and Producer Price Index releases, as well as other monthly and quarterly economic releases that include health spending. I have suggested health inflation is stirring, which is counter to respected scholars like Chris Conover of Duke University and those at the Altarum Institute, the “go to” source for analysis of health inflation.

However, I seem to be siding with ordinary Americans, who are struggling as much as they ever did to pay medical bills. I expect people still struggle because, although inflation in health goods and services is low by historical standards, it is high relative to general inflation faced by consumers.

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Feb 04, 2016 | 12 comments | by

CPI: Prescription Prices Finally Drop Amid General Deflation

BLSMedical prices grew 0.1 percent, versus a decrease of 0.1 percent for all other items, in December’s Consumer Price Index. Prices for prescription drugs actually decreased 0.3 percent, even better than the small price increase in the Producer Price Index (PPI).

Prices for physicians’ services were flat, however, whereas they had jumped in the PPI. Because CPI measures prices as observed by consumers and PPI prices as observed by producers, this suggests that prices paid to physicians by non-consumers (i.e., third parties) have increased more than prices paid by consumers. This supports the principle that when consumers face prices directly, prices go up less than when intermediated by third parties.

Overall, medical care inflation was tame in December. Longer term, it still significantly outpaced the CPI other than medical care, by two percent over the year (Table I).

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Jan 21, 2016 | 5 comments | by

PPI: Physician Prices Jump Amidst Deflation

BLSThe stock market took a hit this morning, as the Producer Price Index turned back to deflation, dropping 0.2 percent in December and 0.1 percent in 2015 (Table I). Health prices are still growing faster than other prices. This is especially true for pharmaceuticals, for which prices increased 8.2 percent last year, versus a 3.7 percent decline in prices for final demand goods. Although political attacks on pharmaceutical prices are misguided, it is likely they will continue as long as this situation persists.

With respect to services, health price inflation is not as extreme. However, the jump of 1.3 percent for physician prices in December is remarkable.

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Jan 15, 2016 | Leave a Comment | by

What is Driving Health Prices Up?

The recent arrest of Martin Shkreli, former CEO of Turing Pharmaceuticals, for securities fraud, reminds us that high prescription drug prices are today’s whipping boy for the costs of health care. Hillary Clinton and other politicians have promised to impose federal controls on pharmaceutical prices.

However, prescription drugs have not been the fastest growing item in health care since the economy started to enter the Great Recession in 2007. That distinction belongs to health insurance (specifically, medical and hospital insurance, not workers’ compensation, income replacement, or long-term care). Table I shows price indices for various components of personal consumption expenditures, indexed such that 2007 equals 100.

PCE

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Dec 18, 2015 | 6 comments | by

CPI: Hospitals Under Pressure As Physician Prices Rise

BLSNovember’s Consumer Price Index (CPI) indicates health prices are moderating, though still increasing higher than non-heath consumer goods. In the third piece of bad news for hospitals (from their perspective, at least, after the Quarterly Services Survey and the Producer Price Index), prices for hospital services actually dropped (See Table I).

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Dec 16, 2015 | 2 comments | by

PPI: Pharmaceutical Prices Finally Tame In November

BLSNovember’s Producer Price Index (PPI) finally saw a slowdown in pharmaceutical price increases, which increased 0.3 percent, month on month. This was the same as the overall PPI increase. Price increases for health goods and services were very slight, compared to general PPI. Indeed, two categories (X-Ray & electromedical equipment and biological products including diagnostics) actually experienced price deflation (see Table I).

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Dec 15, 2015 | 1 comment | by

CPI: Medical Prices Rose Three Times Faster Than Other Prices; Hospitals Stand Out

BLSOctober’s Consumer Price Index (CPI) confirms medical prices continue to spring ahead of prices for other goods and services. Overall CPI increased 0.2 percent on the month and also 0.2 percent, year on year. Medical prices, on the other hand, increased 0.7 percent on the month and 3.0 percent, year on year (Table I).

20151117 CPI

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Nov 17, 2015 | 4 comments | by

PPI: Health Prices Continue to Rise Faster Than Others

October’s Producer Price Index declined 0.4 percent, month on month, and dropped 1.6 percent, year on year. Mild deflation continues to take hold in the general economy. However, it is not so in health care. Of the 14 sub-indices for health-related goods and services, only three declined month on month. Only six declined year on year (see Table I).

20151113 PPIa

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Nov 13, 2015 | Leave a Comment | by

CPI: Deflation Except In Health Care (Again)

I admitBLS this is getting a little repetitive, but it is not my fault the Bureau of Labor Statistics (BLS) releases the Consumer Price Index one day after the Producer Price Index. The CPI confirms (once again) the price behavior indicated by yesterday’s PPI.

While consumer prices were down 0.2 percent, month on month, and flat year on year, medical prices increased 0.2 percent and 2.5 percent (Table I). However, prescription drugs experienced quite moderate price increases last month. This means that while prices of medical goods and services overall increased, month on month, there was no sticker shock versus the CPI. Unfortunately, yesterday’s PPI suggests that price increases are flowing through the system again, and we can expect to see a pick-up in health prices versus overall inflation, in future CPIs.

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Oct 15, 2015 | 1 comment | by

PPI: Deflation Except in Health Care

BLSSeptember’s Producer Price Index declined 0.5 percent, month on month, and dropped 1.1 percent, year on year. A mild deflation appears to be taking hold in the general economy. However, it is not so in health care. Of the 14 sub-indices for health-related goods and services, only five declined month on month. Only three declined year on year (see Table I).

20151014 PPI

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Oct 14, 2015 | Leave a Comment | by
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