Impact of inflation on U.S. healthcare - statistics & facts

Overall inflation in the United States reached 8.3 percent in July 2022, according to the 12-month percentage change in the consumer price index (CPI). During the same period, the costs of medical care increased by 4.8 percent. Historically, healthcare costs, including medical services, insurance, prescription drugs, and medical equipment, have risen faster than other costs in the overall economy. Recently this trend reversed and for the first time in over three decades, the overall inflation rate increased at a faster rate than medical care costs.

Producer price index

Even though the healthcare system has remained resilient to the record-high inflation in the U.S., it may not continue to stay this way in the near future. Apart from CPI, another measure for inflation is producer price index (PPI) which represents inflation from the viewpoint of industry and business. PPI considers changes in the output cost of services of domestic producers with a focus on the actual transaction prices. Prices for medical services are typically predetermined, either administratively for government programs like Medicare and Medicaid or through agreements between providers and insurers, many of which are calendar-year-bound. A recent KFF analysis reports that since July 2014 the overall health services PPI increased by 17.8 percent.

Inflation impact on insurance

Currently, the rising healthcare input costs are absorbed by the providers, it is only a matter of time until it filters down to the payers, who will eventually pass down the cost increases to employers and private consumers. Healthcare industry specialists, economists, and business leaders predict that health coverage and out-of-pocket medical costs are going to soar due to the wage, revenue, and supply chain constraints that battered hospital and clinic margins during the pandemic. According to a KFF survey of ACA marketplaces, a median increase of ten percent in health insurance premiums is expected in 2023. After years of stable premium rates, Americans will soon feel the pinch of healthcare inflation as they are most likely to experience hefty premium increases beginning next year.

Inflation impact on consumers

The volatile economic environment is changing how Americans prioritize healthcare over other needs. Recent consumer surveys reflect the change in the attitude of Americans toward healthcare utilization and consumption of healthcare services due to cost concerns. Consumers are more likely to forgo medical treatments, skip prescription drugs, and have higher medical debt due to inflation. The government has recently introduced the Inflation Reduction Act (IRA) to soften the blow of inflation on millions of Americans. IRA healthcare provisions aim to lower out-of-pocket drug expenses for people with Medicare and cap Medicaid prescription drug spending. A better picture of inflation’s short-term and long-term impact on the healthcare sector will emerge in the coming months and years.
This text provides general information. Statista assumes no liability for the information given being complete or correct. Due to varying update cycles, statistics can display more up-to-date data than referenced in the text.
Published by Preeti Vankar, May 15, 2023

Key insights

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