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Is Health Care Inflation Easing?


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April 18, 2006

Is Health Care Inflation Easing?

Michael Mandel

When I looked at this morning's PPI release from the BLS, the low numbers for health care inflation jumped out at me.

Now, these numbers have to be interpreted with care, but the slowdown in the cost of imaging is particularly noteworthy, since that has been one of the big areas of fast growing costs. That may be due to competition. Similarly, the slowdown in nursing home and home health care inflation is also important, if it continues.

11:03 AM

Health

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Interesting data. If there's anything in healthcare that *should* be subject to cost reductions, it's imaging: one would think that higher volumes, offshoring of components manufacturing, improved designs, etc would lead to a downward cost trend, even given improving functionality.

In the 10-K footnotes for every company having an employee/retiree healthcare plan, there is an estimate about future trends in healthcare costs. Just about every one that I have looked at projects the rate of increase to start declining after this year.

Wouldn't it be remarkable if they were actually right?

Posted by: David Foster at April 18, 2006 09:41 PM

Are the increased costs of health care benefits that are being paid for by employers being counted as "wage gains" for employees? While they ought to be because they are a form of compensation, it should also be reported what wages are MINUS benefits packages to get a real view of what income people are actually subsisting on.

While I'm thinking of it, they really ought to track the average wage of jobs LOST in the US and the average wage of HIRING jobs, so we can get a view of what's happening in the job destruction/creation cycle.

I believe I recall the wages for new college grads has been in decline for a few years now. I am guessing that the same is happening for all people hiring into new jobs - including those that previously made a decent living before being laid off.

Posted by: Brandon W at April 20, 2006 11:30 AM

I have linked to this on my blog, and have written about how this may finally cause real wages to rise at a robust rate..

Posted by: Kartik at April 21, 2006 06:50 PM

This would be great news, if the slowdowns in cost increases were in fact passed on to the health care consumers in the form of smaller increases in health insurance premiums. I haven't seen this for our own family; our premiums went up 33% (2006, when compared to 2005) with no changes in health status. It would be interesting to understand why health insurance premiums continue to increase much more rapidly than the underlying costs of providing health care.

Posted by: Leslie D. at April 22, 2006 12:10 PM

Where ya at, man? Choke on your dark matter?

Posted by: kevin at May 4, 2006 05:17 PM

Kevin,

I signed on to say the same thing only my comment wasn't going to be as funny.

Posted by: Joe at May 9, 2006 03:09 PM


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