Health Care Cost Inflation Is Tumbling

[xchrom]

http://www.businessinsider.com/what-health-care-cost-inflation-means-2013-10



***SNIP

Much of this has been attributed to favorable structural changes like improved hospital efficiencies, increased use of generic drugs, and declining hospital readmission rates.

However, falling health care inflation may also reflect unfavorable cyclical forces. Maury Harris, UBS's top economist, wrote about this in a recent note to clients (emphasis added):

There are at least two implications if the slowdown in medical care inflation mainly reflects cyclically weaker health care spending stemming from relatively high unemployment and lesser or delayed spending by the uninsured. First, for the time being, slower medical care inflation could be signaling the effects of still high unemployment on consumer spending that can be postponed. In other words, slowing health care inflation might be a sign of continued sluggishness in the overall economy. Second, if slower medical care inflation mainly represents postponed health care demand, such inflation should start to re-accelerate as further unemployment reductions enable more venting of delayed (i.e., “pent-up”) healthcare demand.

But Harris doesn't dismiss the long-term structural argument either.

If slower healthcare inflation instead reflects longer-run and sustained changes in how the healthcare system operates, lesser health care inflation could become a more enduring characteristic of the U.S. economy. Examples of such changes could be Obamacare, improved bargaining power for third-party private and government purchasers vis-a-vis healthcare suppliers and more price comparison shopping by individuals.



Read more: http://www.businessinsider.com/what-health-care-cost-inflation-means-2013-10#ixzz2idlq38s1

[Turbineguy]

1. This is a catastrophe

that's only going to get worse. The Teabaggers had better collapse the world economy PDQ to fix this!

[NYC_SKP]

2. I'd love to see an overlay graph of the cost of premiums over the same period.

It would be a shocker, and the difference between premiums and actual costs would have to be, I'm guessing, mostly profit.

[canoeist52]

3. That would be due to the cost of high deductibles.

Patients have put off or denied themselves the care that would make life better. Priorities are food housing and transportation here.

[BlueStreak]

4. Well, I guess this is progress

At least these articles now at least mention the ACA as being, in some small way, remotely connected with bending the spending curve. But they are still whipping that dead horse about it being mostly an indicator of a lingering recession. Well, if that were the case, we would have seen the cost inflation shoot back up to the "normal" 15-20% range as unemployment dropped from 9% to 7%

[Yo_Mama]

5. That's not inflation, that's SPENDING - the title is inaccurate.

And one of the key reasons why spending is dropping is that people can't afford healthcare. This is not necessarily good news!

Because we are spending less on healthcare, the inflation rate is dropping. That means that health care costs are rising faster than other costs, so the in fact the reality is the opposite of what is being stated. Healthcare inflation is rising.

If you look at the detailed CPI (inflation) tables:
http://www.bls.gov/news.release/cpi.t02.htm

YoY medical commodities have not increased as a whole.
YoY medical services increased 3.1%
YoY hospital services increased 5.7%
YoY outpatient hospital services increased 6.0%.
YoY health insurance increased 2.9%.

Overall inflation YoY increased 1.5%.

[xchrom]

6. thanks for the extra info. nt