Tuesday, October 18, 2016

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


The 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).




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