Spike in prices may be coming as food, gas, electricity, labor expenses all rise.
Health care price increases are lagging behind inflation in the overall economy, which could lead to steeper price hikes in the future.
Prices for food, electricity and gas prices have soared to four-decade highs, but in 2022, health care price increases have not risen at the same rates, said the review “Overall inflation has not yet flowed through to the health sector.” The Peterson Center on Healthcare and KFF publish the Health System Tracker with financial and economic studies of medical care. The inflation report analyzed data from the U.S. Bureau of Labor Statistics, including the consumer price index (CPI) and producer price index.
Health prices generally are set in advance administratively or through private insurance contracting, the study said, so prices now could be tied to insurance plans or the calendar year. At least two factors could bump up health care prices for 2023:
Rising insurance costs. A KFF-Peterson review of 2023 health insurance rates showed providers of Affordable Care Act Marketplace insurance anticipate increases of 10%.
Health worker wage increases. “Rising average employee wages and continued staff shortages in the wake of the pandemic may put upward pressure on operating costs,” particularly for hospitals and nursing homes.
In years past, health care prices tended to outpace costs of other consumer goods and services.
Since 2000, medical prices grew 1% to 5% a year, reaching total growth of 110.3%. In the same time, prices of overall goods and services at times have been more volatile, but generally increased at a slower rate than health care prices. Since 2000, general consumer goods and services have risen by 71%, according to the study.
That has changed this year. In July 2022, overall prices were up 8.5% from the previous year, while prices for health care rose by 4.8%. The most dramatic price spike is for gasoline, up 44% from the year before, while within health care, the consumer price index show prices for physicians’ services have risen only 0.8% from July 2021 to July 2022.