Dive Brief:
- Inflation hasn’t yet rippled through the healthcare sector, even as the consumer price index hit a four-decade high in recent months, according to a tracker maintained by the Kaiser Family Foundation and Peterson Center on Healthcare.
- In July, overall prices grew 8.5% from the previous year, while prices for medical care increased 4.8%, according to the report.
- Commercial and government payers set rates prospectively, meaning it will take years for contracts to be renegotiated and for inflation to be more fully reflected in healthcare costs, the research found.
Dive Insight:
Prices for medical care have historically risen faster than overall consumer prices. Amid today’s inflation, however, healthcare costs are taking a backseat.
To be sure, providers are already feeling the effects, with for-profit and nonprofit operators lamenting in recent financial results that they’ve been strapped by heightened expenses for labor and other supplies.
They’re not yet able to recoup higher payments from insurers, though, and once inflation trickles down to patients, they may end up shouldering greater costs through steeper premium increases and other mechanisms in the coming years, according to the report.
But ultimately, “it is yet to be seen whether or to what extent rising prices in the rest of the economy may eventually affect health prices,” the report said.
Since 2000, medical care prices, which include services provided as well as insurance, drugs and medical equipment, have grown 110%. Prices for all consumer goods and services on the other hand rose 71% during the same period, according to the report.
Medical costs have grown faster and more consistently than prices for other goods and services until recently, rising between 1% and 5% from 2001 to 2020, KFF said.
Looking at data from the Bureau of Labor Statistics and breaking down prices across facilities, both inpatient and outpatient hospital service prices rose 3.9% and 3.5%, respectively, from the prior year, the report found.