The long-term story of health care costs?

Except during WWII, health care costs have outpaced the overall CPI to one extent or another. Also, as may be expected medical costs follow the ups and downs of the CPI-U.   

So the question is why? Is it new technology, innovative drugs, more health care being provided, the expansion of insurance, rising fees? Yes‼️

The 1980s seem to be a takeoff point and that coincides with changes in health insurance including moving from fee schedules to reasonable and customary fee payments.  Beginning around 2008-2010 we saw considerable cost-shifting to patients. It’s not clear of this impact.                           

                                         CPI-U             Medical Cost Inflation [1]

The cost of a item at the end of the period costing $1.00 at the start of the period:

1930-1940                      0.83                            1.02 (1935-1940 only)

1940-1950                       1.72                            1.45

1950-1960                       1.22                            1.47

1960-1970                       1.31                             1.52

1970-1980                       2.12                            2.20

1980-1990                       1.58                             2.17

1990-2000                      1.31                              1.60

2000-2010                      1.26                             1.48

2010-2015                       1.08                              1.15

1940-2015                    $16.91                        $42.93

[1] actual health care costs, not premiums


  1. I think the cost of administrative burden has increased too. Doctor offices now have billing departments, IT contracts for the electronic record keeping, extra test to avoid lawsuits, extra test to bill for extra money, insurance claims, accepting pennies on the dollar from Medicare so they charge more to make up for the losses, etc…

    What happen to see doctor, pay bill and leave?

    I don’t know how it happen but the fact is not too many people can afford to pay cash and when they do, they have to pay the highest amount. So much for see doctor, pay bill.


  2. That health care costs have risen about two and a half times more than the CPI is not surprising.

    Why? Let me count the ways:

    1. CAT SCAN machines.
    2. MRI machines.
    3. Open heart surgeries.
    4. Hip and knee replacement surgeries.
    5. The explosion in the number of drugs that save lives and keep patients healthier.
    6. Availability of Medivac by helicopter.
    7. Eye cataract surgery.
    8. Mammograms.
    9. Spinal fusion surgeries.
    10. The wide spread increase in health related professions that are required for the above.

    Americans use health care services more than ever. Health care services are better (in general) than ever. Result, we pay more.

    Naturally, an individual’s health depends not only on what others do for him, but what he does for and to himself.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s