Health Care Prices Beginning to Accelerate

April 20, 2018

Despite employer efforts to reduce health care costs, rising hospital prices are driving health care inflation to its fastest pace in eight years.  According to a new report from Altarum, "low economy-wide inflation, value-oriented health sector changes, and policy uncertainty put downward pressure on health care prices in mid-2017, but that situation has changed markedly."  Over the past four years, hospital prices have seen historically low rates.  However, over the past year they have increased 3.7 percent, while drug price growth has been just 1.9 percent.  In March, four health categories (hospitals, physician services, dental care and home health) saw year-over-year price increases compared to a year earlier, while two categories (prescription drugs and nursing home care) saw decreases.  Although health care price inflation growth is not much above 2 percent, the unusual period of it growing slower than overall price inflation appears to be over.