High Inflation Hits Health Care
The historically high rates of inflation we are seeing across the economy are hitting all industries—including health care. The U.S. health care inflation rate was 6% in September 2022. A report just released by the Bureau of Labor Statistics puts health care prices increases at 6.5%. That is up from 0.44% from just one year ago.
Americans spend an estimated $4.1 trillion dollars a year on health care, almost 20% of our GDP. Inflation in health care costs will have a significant impact and hit American pocketbooks and state budgets hard. Higher prices will come with higher premiums, deductibles and out-of-pocket costs.
Americans are already struggling with the cost of care. Sixty-four percent of people say they have foregone or delayed care because of concerns about cost. Fifty-eight percent of all debt collections are for medical debt. Price inflation will make an already bad situation worse.
Labor costs are high in the health care industry, but worker shortages have exacerbated the situation. Additionally, price increases for food and overhead are driving hospitals to raise prices as well. For many of us, it will mean higher premiums and deductibles.
Those increases are already showing in the Affordable Care Act (ACA) marketplace plans which have requested to raise premiums for 2023 more than in recent years. The increases will also affect employers who will see costs rise for their employee plans. Some may be faced with cutting coverage or forcing employees to share more of the costs. It will also mean an increase in Medicaid costs for states. Medicaid already compromises around one-third of most state budgets.
What can be done to address the rising costs? Price transparency will put a spotlight on health care spending and where the money is going. It will empower patients to shop around for the best care and best price. You can learn more about health care price transparency here or check out our model Hospital Price Transparency Act.