Historically, the consumer price index (CPI) for all goods and services grows at a slower rate than the CPI for medical costs, according to Sean Cooper, practice leader and senior actuary for the National Council on Compensation Insurance (NCCI). However, the balance between the two pricing indexes shifted this past year.
"For the first time in 20 years, the 'all items' CPI grew significantly fast than the CPI for medical. We are seeing medical inflation, but nowhere near the levels of general inflation," Cooper said during the NCCI's Annual Insights Symposium. NCCI reported drug costs are declining, while physician costs are up slightly and facility costs are rising.
He said there are two reasons for this. First, around 40% of health care costs in the U.S. are paid by Medicare or Medicaid, which have regulated prices similar to fee schedules. The second factor slowing medical inflation are things such as provider networks and generic drugs.
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Steve Hallo
Steve Hallo is managing editor of PropertyCasualty360.com. He can be reached at [email protected]
