Is Healthcare Inflation Simmering Down?

On Thursday, the government will release the CPI numbers for January. I’m not worried about overall inflation which has been extremely tame. But deep within the report, I’m very curious to see how healthcare costs are doing.

As you’re probably aware, healthcare costs continue to rise every year. Here’s a look at the relative inflation of healthcare. This is the healthcare component of the CPI divided by core CPI. In other words, this isn’t just inflation — it’s the healthcare inflation that’s on top of inflation.

This is a very important. Nearly every issue facing our economy and finances at some point intersects with the problem of rising healthcare costs. If that is somehow brought under control, the outlook completely changes.

There’s some emerging evidence for optimism on the cost containment front (NYT: “Slower Growth of Health Costs Eases Budget Deficit“). Here’s the same chart above, but I’ve zoomed in to show the last few years.

The line is still rising, but the last few dots are rather flattish. This is obviously far too early to call a trend, but it’s something worth keeping our eyes on.

Posted by Eddy Elfenbein on February 19th, 2013 at 11:03 pm

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