There are several factors all contributing to the rising cost associated with medical services and products.
Consumer prices are rising across the country, but it hasn’t been specifically determined how much higher health care costs will be headed skyward and how quickly.
Product and labor costs alike have been rapidly climbing throughout the United States.
With consumer prices climbing as they are, health care expenses are expected to go with them, which will send insurance rates upward in 2023 as well. According to a presentation by the Kaiser Family Foundation, inflation, labor costs and insurance rates all play a role in making medical services and products more expensive. The presentation was called “the Health Wonk Shop: Health Care Inflation in the U.S.”, which took place August 24, 2022.
According to data from the federal Bureau of Labor Statistics, it appears that prices in this sector are rising faster than the rest of the economy. This data is obtained through monthly surveys measuring transaction prices for medical products and services, whether payment comes from consumers, private insurers, Medicare or Medicaid. It is based on purchases made in places such as hospitals that offer clinical and physician services, said MPP Corey Rhyan, senior analyst at the Altarum healthcare consultant nonprofit.
The way the changes occur in health care trends depend on wider reaching economic trends, said Rhyan.
According to Rhyan medical prices are experiencing a more rapid rising trend than the rest of the American economy. The reason is that usually in a downturn recession, these prices will either stay stead or slightly increase.
Now, he said that it looks as though the price growth in this sector is falling behind a quick economy-ride inflation pace, greatly due to Medicare, Medicaid, and private insurer negotiating prices prospectively. As a result, the rates are set ahead of time. Such contracts can be agreed upon for anywhere from three to five years, said S&P Global Ratings nonprofit healthcare group senior director and sector lead, Suzie Desai, MBA.
The presentation didn’t make it precisely clear how rising insurance prices would impact the cost of health care for physicians, health systems and hospitals.