Dive Brief:
- Prices for medical services rose a whopping 0.9% in April, the highest jump since the summer of 1990. Hospital services had the highest gain, at 1.9%.
- If gains were to continue at that pace, there would be huge consequences for the Federal Reserve and the federal budget.
- However, economists are not seeing any evidence that the trend will continue.
Dive Insight:
Even with the rollout of the Affordable Care Act, healthcare costs have remained steady; therefore, the April jump in costs left economists scrambling for an explanation. In the end, they were unable to come up with one and do not think the trend will continue. "This is so far above the underlying trend—about 0.3% per month—that we have to regard it as a one-time event," Ian Shepherdson, chief economist at Pantheon Macroeconomics, told MarketWatch.
After seeking an explanation from the Labor Department analysts and receiving no guidance, Laura Rosner, an economist at BNP Paribas, agreed. She said she believes hospital costs "are prone to some noise" and she doesn't think the gain is likely to continue in the coming months.