Healthcare Costs Update

The government released the October CPI report this morning. Once again, inflation continues to be tame. Consumer prices fell 0.1% last month which was the first drop in six months. The “core rate,” which excludes food and energy, rose by 0.1%.

What I wanted to see was the trend of medical costs versus core inflation. Medical costs had been outpacing core inflation for decades, but that abruptly slowed down last year. There was, however, a recent uptick in medical costs in August, but that trend may have already faded.

Here’s the chart of medical costs divided by core inflation.

From August 2012 to July 2013, the rise in medical costs was almost the same as the rise in core prices. If this continues, that’s a game changer.

Posted by Eddy Elfenbein on November 20th, 2013 at 12:02 pm

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