The Consumer Price Index rose 0.2 percent in November.
Remarkably, medical prices were flat overall. This is the third
month in a row we have enjoyed medical price relief. Prices of prescription
drugs dropped by 0.6 percent. Even the prices of health insurance and hospitalization
dropped a smidgeon!
Prices for physician services rose the most, by 0.6
percent, followed closely by other medical professionals (0.5 percent).
Over the last 12 months, however, medical prices have
increased 2.7 times faster than non-medical prices: 1.5 percent versus 4.0
percent. Price changes for medical care contributed 20 percent (one fifth) of
the overall increase in CPI.
Many observers of medical prices decline to
differentiate between nominal and real inflation. Because CPI is has been low
until recently, 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 have not seen 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.)
Technical Note: Professor Christopher Conover explains why
some scholars de-emphasize CPI and medical CPI as appropriate measures of
inflation for health care, preferring another dataset, Personal Consumption
Expenditures (PCE). There are very good reasons for such a conclusion. However,
CPI comes out monthly. The PCE price index is updated only quarterly, and that
is only for services. Prices for goods, such as drugs and medical devices, are
updated only annually. Plus, consumers only really care about price increases
they experience directly, not price increases borne by other economic actors.
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