October’s Consumer Price Index (CPI) confirms medical prices continue to spring ahead of prices for other goods and services. Overall CPI increased 0.2 percent on the month and also 0.2 percent, year on year. Medical prices, on the other hand, increased 0.7 percent on the month and 3.0 percent, year on year (Table I).
To be sure, much of the very tame CPI over the last twelve months is due to the decline in energy prices. Nevertheless, the CPI for all items less food and energy rose just 1.9 percent, significantly less than medical care’s 3.0 percent. If it were not for health care, CPI would be deflating, both during October and for the last twelve months.
While prices of prescription drugs have increased a lot over the last twelve months, the fastest growing prices are for hospitalization: 5.3 percent. This suggests the current political outcry over prescription prices, while understandable, might not be addressing the correct target.