Wednesday, November 20, 2013

"Healthcare Care Inflation At Lowest Rate in 50 Years"

Ezra Klein of the Washington Post is out this afternoon with a short note about the unexpected slowdown in the rate of growth in healthcare spending.

Klein writes that this chart published by the Council of Economic Advisers (CEA) illustrates the good news on health care costs:


I went to the CEA site and they offered up another chart that illustrated the dramatic changes going on in health care spending:

Now, to be sure, the CEA is part of the White House, so it is probably not the most unbiased source.

But on the other hand, it is hard to argue with the data.

Here's  an excerpt from what Jason Furman of the CEA wrote in his note accompanying the charts:

..Health care price inflation is at its lowest rate in 50 years: Measured using personal consumption expenditure price indices, inflation for health care goods and services is currently running at just 1 percent on a year-over-year basis, the lowest level since January 1962.  (Health care inflation measured using the medical CPI is lower than at any time since September 1972.)

..The slowdown in health care cost growth is not due solely to the Great Recession; something has changed: The fact that the health cost slowdown has persisted so long even as the economy is recovering, the fact that it is reflected in health care prices – not just utilization or coverage, and the fact that it has also shown up in Medicare – which is more insulated from economic trends, all imply that the current slowdown is the result of more than just the recession and its aftermath.  Rather, the slowdown appears to reflect “structural” changes in the United States health care system, a conclusion consistent with a substantial body of recent research.

More fuel for the deflationary camp?