Healthcare Prices Jumped 50 Percent Year on Year from 12-Month Moving Average

The Altarum Institute is the go-to source for understanding healthcare prices and employment. According to its latest report:

Health care prices in May 2014 were 1.8% higher than in May 2013, well above the 12-month moving average of 1.3%. Hospital prices grew 2.1% while prescription drug prices rose 3.6%.  Physician and clinical services prices, which exhibited near-zero growth in the first quarter of 2014, grew by 0.6%. Health care gained 21,000 jobs in June 2014. Over the first half of 2014, the health sector grew by over 20,000 jobs per month, about 20 percent higher than in the first half of 2013.

Prices of prescription drugs jumped higher than prices of other healthcare goods and services. Further, healthcare prices continue to grow significantly faster than the Consumer Price Index (CPI). Exhibit 7 illustrates how ineffective Obamacare is at restraining costs: Per capita healthcare utilization increased at about 5.5 percent (year on year) in the first half of 2002, well before the December 2007 onset of recession, and dropped until the end of 2010. The growth of consumer-driven health care, including Health Reimbursement Arrangements (HRAs) and Health Savings Accounts (HSAs) remains the most plausible explanation for this effect.

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  1. Perry says:

    I don’t see Obamacare bringing down prices of insurance or any other healthcare costs. How it’s developers thought this plan would lower healthcare costs is beyond me.

  2. Flyover Country American says:

    I agree, HSAs and HRAs are obviously the way to go. Obamacare, in spite of how the Left frames the law, will inevitably lead to higher prices and lower quality in healthcare. HSAs and HRAs, make economic sense and put more of the individual’s decision-making in their own hands, leading to a more competitive and thus less expensive and more efficient system.

    • Bill B. says:

      Exactly, medical savings accounts are the best way for individuals to combat health care costs. However, caps on them from ObamaCare will only hinder their benefits. ObamaCare is making sure it kills any sort of sanity in our health care market.

  3. Freedom Lover says:

    The graph shows that year on year prices are (very recently) the highest that they have been since before 2005. This does not bode well for those who claimed that the ACA was going to drive down healthcare costs.

    • Matthew says:

      ACA does very little to drive health care costs down. If health care was allowed to function in a market with less regulations and is free-er, then the patient has the power, competition thrives and costs go down. Everyone wins.

  4. Mary says:

    “Prices of prescription drugs jumped higher than prices of other healthcare goods and services”

    Wonderful. We’re finding more ways to remove the need for surgery and hospitalization by utilizing drugs, then making them too expensive to use. Great plan, America.

  5. Phill S says:

    I’m curious as to why recessions do not seem to have very much to do with changes in healthcare spending, at least compared to times where we have no economic downturns. I’m also interested to see why the number actually went negative in 2010.

    • Jordan says:

      My guess would be that it’s because people get sick when they get sick, not when it’s economically convenient.