September 2, 2022

Medical care inflation rising as consumer sentiment hits historic low

In June 2022, US inflation reached its highest rate in four decades, with energy and food price increases leading the way. In the graphic below, we use Bureau of Labor Statistics data to examine the extent to which this post-pandemic price spike has impacted healthcare. After experiencing above-average inflation, the 12-month inflation rate for medical care (which includes both medical services and medical commodities) began falling in July 2020, just as overall inflation started its recent climb. However, after bottoming out last summer, medical care prices have risen in tandem with all goods. In other words, healthcare inflation lagged economy-wide inflation by a year, but is now catching up. Rising prices across the board have had a significant effect on the psyche of the American public, with at least one measure of consumer sentiment reaching a historic low earlier this summer. Americans are worried about medical expenses specifically: according to a recent surveyfour of consumers’ top seven affordability concerns are healthcare-related. With inflation pinching everyone’s wallets, and medical care prices no longer an exception to the rising tide, health systems should expect care deferrals to continue as consumers prioritize their reduced spending power on household necessities instead of healthcare.

Inflation Image