Medical-Price Inflation Is at Slowest Pace in 50 Years

Just three months after noting that "Medical Costs Register First Decline Since 1970s," the Wall Street Journal points out what seems to be a little-recognized fact:

Medical-Price Inflation Is at Slowest Pace in 50 Years

Medical prices are rising at their slowest pace in a half century, a shift in the health-care industry that could provide relief to government and businesses' budgets while also signaling consumers are being left with a larger share of the bill.

The prices paid for medical care in July rose just 1% from a year earlier, the slowest annual rate of growth since the early 1960s, according to Commerce Department data. Health-care increases now trail overall inflation, which itself has been historically slow in recent years.

The price data help explain why growth in overall health spending has slowed down in the past several years. The trend, if continued, has big implications for the government's finances because health-care costs are the biggest long-term driver of the federal deficit.

It also is the backdrop for the biggest change in the U.S. health-care system in decades, the rollout of new health-insurance exchanges on Oct. 1 as part of the Affordable Care Act. The overhaul, which was a top goal of President Barack Obama, is likely to be judged on whether it furthers the recent cost trend, as supporters predict, or undermines it, as critics expect.

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That doesn't seem to come up much in our political discourse.

Greenbeard said:

Just three months after noting that "Medical Costs Register First Decline Since 1970s," the Wall Street Journal points out what seems to be a little-recognized fact:

Medical-Price Inflation Is at Slowest Pace in 50 Years


That doesn't seem to come up much in our political discourse.

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Of course it doesn't come up. It's fact based, and conservatives don't like facts because facts rarely support whatever point they happen arguing.

Greenbeard said:

Just three months after noting that "Medical Costs Register First Decline Since 1970s," the Wall Street Journal points out what seems to be a little-recognized fact:

Medical-Price Inflation Is at Slowest Pace in 50 Years


That doesn't seem to come up much in our political discourse.

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Then the AHA is doing what it promised to do. Decrease the cost of healthcare insurance. I'm guessing that the end-game of Obamacare all along was to shift the cost burden onto the insureds. Only when insureds are paying out of their pockets will they actually care what things cost. These rising deductibles in the four plan levels are going to go a long way towards decreasing care costs.

"Let's see . . . I can go to the ER for this sore throat and pay the first $2,000 out of pocket, or I can wait and go to the doctor's office and pay his office visit charge of $120 out of pocket. Hmmmmm, which one am I likely to do?"

However, this doesn't effect Medicaid patients . . . so I'm betting there's "more to come."

MaggieD said:

"Let's see . . . I can go to the ER for this sore throat and pay the first $2,000 out of pocket, or I can wait and go to the doctor's office and pay his office visit charge of $120 out of pocket. Hmmmmm, which one am I likely to do?"

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Deductibles work for people who are relatively healthy. Because there is now mandatory inclusion of people who are not healthy on the insurance programs, and these people routinely burn through any deductible and can rack up however much more health care they want, there are still going to be a lot of people out there with zero concern for what their health care costs, because they're paying none of it. And yes, some people get health care because they want it. Doctors everywhere know exactly how to write up what a patient is requesting as being "medically necessary" nonetheless.

imagep said:

Of course it doesn't come up. It's fact based, and conservatives don't like facts because facts rarely support whatever point they happen arguing.

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So what exactly is it about these facts--brought to light by a conservative leaning publication, by the way--that conservatives should run away from?

Medical costs are still rising though, way out-pacing income increases for the great majority.

And, since medical costs themselves are still rising, medical insurance costs are still rising as well, again, faster than income increases can reasonably compensate.

Because these two cost components were already gouging extremely, it's hard to get all tickertape paradish about a slow down in the rate of increase in these costs.

Let me know when things return to manageable reasonableness, when the costs of both actually decline while income begins a true return to pre-Great Recession levels.

Now that will be worth cheering about.

MaggieD said:

Then the AHA is doing what it promised to do. Decrease the cost of healthcare insurance. I'm guessing that the end-game of Obamacare all along was to shift the cost burden onto the insureds. Only when insureds are paying out of their pockets will they actually care what things cost. These rising deductibles in the four plan levels are going to go a long way towards decreasing care costs.

"Let's see . . . I can go to the ER for this sore throat and pay the first $2,000 out of pocket, or I can wait and go to the doctor's office and pay his office visit charge of $120 out of pocket. Hmmmmm, which one am I likely to do?"

However, this doesn't effect Medicaid patients . . . so I'm betting there's "more to come."

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A couple of things... decreasing medical costs is not the same as decreasing "the cost of healthcare insurance".. in fact, the cost of healthcare insurance has been outpacing medical costs for some time.

Second.. the idea that "rising deductibles" are the cause of decreases in medical costs just don't really bear out. Deductibles have been present for decades. People have dealt with them for years. the idea that huge numbers of folks just willy nilly go in to the doctors when they don't need to is just not logical. in fact, one of the big issues is that people AVOID going to the doctor when they should and subsequently have much higher medical bills.

Lastly, I think the lowering of medical costs comes in part from the lowering of reimbursement to physicians, and that has had consequences such as decreased access, less care, poorer quality care etc

Ontologuy said:

Medical costs are still rising though, way out-pacing income increases for the great majority.

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Maybe thats an income distribution issue and not a medical cost issue.

Regardless, I fully support allowing the free market mechanism of price competition to control costs. It works in every other industry. We just have to get away from the idea that a third party should pay for our healthcare needs.

jaeger19 said:

A couple of things... decreasing medical costs is not the same as decreasing "the cost of healthcare insurance".. in fact, the cost of healthcare insurance has been outpacing medical costs for some time.

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I was thinking the exact same thing. We often tend to use the term "healthcare", when we mean "healthcare insurance", and obviously they aren't the same thing.

Second.. the idea that "rising deductibles" are the cause of decreases in medical costs just don't really bear out. Deductibles have been present for decades. People have dealt with them for years. the idea that huge numbers of folks just willy nilly go in to the doctors when they don't need to is just not logical. in fact, one of the big issues is that people AVOID going to the doctor when they should and subsequently have much higher medical bills.

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You are only looking at one factor. First off, if the cost of medical care is not climbing as fast, and if deductibles are rising, then that is a correlation, and although correlations don't prove causation, they certainly tend to support causation. Second, although demand is a price issue, when we have larger deductibles, we tend to price shop more, and force healthcare providers to compete based upon price. With low deductibles we really don't have the competition mechanism that keeps prices in check in every other industry.

Lastly, I think the lowering of medical costs comes in part from the lowering of reimbursement to physicians, and that has had consequences such as decreased access, less care, poorer quality care etc

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Thats possible, but do you have any evidence that the quality of our healthcare has dropped?

imagep said:

Maybe thats an income distribution issue and not a medical cost issue.

Regardless, I fully support allowing the free market mechanism of price competition to control costs. It works in every other industry. We just have to get away from the idea that a third party should pay for our healthcare needs.

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Like the overwhelming vast majority so suffering, I would be satisfied with whatever solves the income to medical cost out-of-balance problem.

You are only looking at one factor. First off, if the cost of medical care is not climbing as fast, and if deductibles are rising, then that is a correlation, and although correlations don't prove causation, they certainly tend to support causation. Second, although demand is a price issue, when we have larger deductibles, we tend to price shop more, and force healthcare providers to compete based upon price. With low deductibles we really don't have the competition mechanism that keeps prices in check in every other industry.

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You are right about causation. Think about it.. if your deductible is 1500 dollars and then goes up to 2000 dollars. Are you really saying that you DID go to the Emergency room for sniffles when you had a 1500 dollar deductible (and had to pay for the visit in total)... but NOW that your deducible went to 2000 dollars.. you are NOT going to the emergency room for the sniffles because now you have to pay out of pocket for the visit (when you already did before?)

I'll buy it if you went from a zero deductible to a 1500 dollar deductible... but who has had zero deductibles in the last decade? Pretty dang few right? Whats gone up is 1500 deductibles have gone to 2000, 2500 to 3500 etc etc. Those jumps are simply not causing changes in human behavior. That was done the minute there was a deductible.

Second.. Larger deductibles do not cause folks to price shop more... in fact.. there isn't much price shopping going on. You know how many requests I get for my prices a month? Less than 1. Probably 5 in the whole year. That's because if the person has insurance.. which they will with a deductible.. the price will be exactly the same for all providers that accept their insurance.

Think about it. I have a contract with Blue Cross.. so do all of my other competitors. I charge 150 dollars a procedure but agree to accept Blue Cross rates. Blue Cross allowables are 120 for that same procedure. that's what the patient has to pay, regardless of the provider. (and believe me... dang few providers are going to make their rates less than the allowables).

With third party payers.. there is less price competition mechanism than in other industries.

Thats possible, but do you have any evidence that the quality of our healthcare has dropped?

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Most of it anecdotal after 20 years in the medical field. How much time people get to see the doctor versus seeing another provider. Availability of the doctor. Coordination of care issues, less patient focused care. Care based on reimbursement versus whats in the interest of the patient etc.

Its hard to quantify the decrease in care.. because we also have intervening factors that lead to poorer outcomes than before. Increase poverty, obesity, lack of healthcare access/insurance, lack of exercise etc. So it makes it difficult to find causation among the various factors..

imagep said:

Maybe thats an income distribution issue and not a medical cost issue.

Regardless, I fully support allowing the free market mechanism of price competition to control costs. It works in every other industry. We just have to get away from the idea that a third party should pay for our healthcare needs.

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Health care isn't a free market and can't be, because fundamental market forces are missing. Things like choice, a reasonably informed consumer, competing products, etc.

If Sony makes a ****ty television, I can buy a Samsung television. Or a laptop. Or an iPad. Or a tennis racket. Alternative entertainment devices. Or I can just not buy anything at all. Plus, I have a reasonable understanding of televisions and various other entertainment devices, so have at least some ability to assess their value.

I can't choose to do a blood test for lung cancer instead of the chest x-ray. I have no ability to assess the value of doing the chest x-ray versus some other scan. I can't choose to walk away and do nothing because a doctor is telling me I might have lung cancer.

Without real choice, how can health care ever truly be a free market?

Deuce said:

Health care isn't a free market and can't be, because fundamental market forces are missing. Things like choice, a reasonably informed consumer, competing products, etc.

If Sony makes a ****ty television, I can buy a Samsung television. Or a laptop. Or an iPad. Or a tennis racket. Alternative entertainment devices. Or I can just not buy anything at all. Plus, I have a reasonable understanding of televisions and various other entertainment devices, so have at least some ability to assess their value.

I can't choose to do a blood test for lung cancer instead of the chest x-ray. I have no ability to assess the value of doing the chest x-ray versus some other scan. I can't choose to walk away and do nothing because a doctor is telling me I might have lung cancer.

Without real choice, how can health care ever truly be a free market?

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Maybe we should become as informed about health care issues as we are televisions, iPads and tennis rackets. It's just a suggestion.

Before I had surgery about a year ago, I spend many hours researching it, and researching alternative treatments, and various forms of the surgery. The last thing that anyone should do is to blindly take the advice of a doctor without verifying and looking into options.

Greenbeard said:

That doesn't seem to come up much in our political discourse.

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Interesting. Wonder why.

Could be a push back by insurance against health care costs. If you look at the professional world from 2007~2010, fees didn't go up that much from accountants to lawyers to engineers to architects due to client push back on fees. It's amazing what a concerted effort by clients can do to pricing. Just a thought.

Here's more about the drop in health insurance premiums:

District officials last week announced that, for the third time since they started posting proposed plans on a new health insurance marketplace for small businesses, an insurer has lowered its initial prices for coverage. It is a sign, they say, that the marketplace will help bring down health costs for businesses, which have skyrocketed in recent years.

Kaiser Permanente, one of four insurance providers registered to sell to small firms on D.C. Health Link, is the most recent to drop its rates, lowering premiums by 4.4 percent.

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If everyone has health insurance, then there will no longer be a need to pass the costs of the uninsured on to the rest of us. Could that be a factor?

imagep said:

Maybe we should become as informed about health care issues as we are televisions, iPads and tennis rackets. It's just a suggestion.

Before I had surgery about a year ago, I spend many hours researching it, and researching alternative treatments, and various forms of the surgery. The last thing that anyone should do is to blindly take the advice of a doctor without verifying and looking into options.

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Why did you need surgery?

Deuce said:

Why did you need surgery?

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I couldn't breath through my nose well, it was a long term problem that I have had to some degree most of my life, partially from getting my nose broke multiple times as a child, but it was getting worse and I had an uncurable sinus infection due to it. During the few months leading up to it, I wasn't sleeping for more than a few seconds at a time, even tried CPAP and it didn't help at all.

I had turbinate reduction on one side where they removed the bone underneith the mucosa tissue, and septoplasty where they broke the bone that was crooked at reset it on the other side. Very happy with the results, and I don't have to be hooked up to a CPAP machine for the rest of my sleeping life, however I think that the doc should have done the turbanate reduction on both sides.