Health prices to outpace inflation for first time since 2010

Since 2010, our health prices have stayed in pace or below inflation. For the first time since then, they're expected be much, much more. Get the details in this article from Employee Benefit Advisor.


The growth in U.S. healthcare prices is projected to outpace economy-wide inflation for the first time since 2010, the second report in a week to signal the end of a long stretch of restrained medical increases.

This year, price increases for personal health expenditures are projected to rise 2.2%, compared with 1.9% for overall inflation, according to a report released Wednesday by the Centers for Medicare and Medicaid Services. The findings confirmed a recent analysis warning that the U.S. could be at the cusp of a return to higher medical inflation.

Health spending is determined by the price of goods and services, as well as how much health care people use. In recent years, increases in health spending have been driven by volume, as millions more people gained insurance coverage under the Affordable Care Act. While high-cost drugs have made headlines, overall price hikes have been historically low, increasing by an average of 1.1% annually between 2014 and 2016.

Those trends are projected to reverse. Government actuaries expect the number of people without health insurance to increase slightly after Republicans lifted the ACA’s penalty for going uninsured late last year. Medical price growth, meanwhile, will rebound, “in part reflecting more rapid growth in healthcare workers’ wages,” the report said.

 
Bloomberg

Healthcare inflation has been partly restrained by limits on how much Medicare pays hospitals and physicians under the ACA and other legislation, combined with overall slow growth in prices throughout the economy.

In recent days, concerns about higher-than-expected inflation have rattled stock markets and pushed up Treasury yields. Investors feared that a tightening labor market and rising wages could push up prices and spur the Federal Reserve to raise interest rates faster than anticipated to keep the economy from overheating.

Total health spending is projected to increase by 5.3% to about $3.7 trillion in 2018, according to the CMS report, and the growth will average 5.5% per year over the next decade. While that’s still faster than the overall rate of economic growth, it’s an improvement from past decades. Between 1990 and 2007, annual health spending increased by 7.3% per year.

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Source:
Bloomberg News (20 February 2018). "Health prices to outpace inflation for first time since 2010" [Web Blog Post].Retrieved from address https://www.employeebenefitadviser.com/articles/health-prices-to-outpace-inflation-for-first-time-since-2010?feed=00000152-175f-d933-a573-ff5f3f230000

Trump proposes bigger role for skimpy insurance, undermining ACA

Are you an advocate of short-term insurance plans? Get some of the pros and cons in this article from Employee Benefit Advisor on the Trump administration.


The Trump administration is proposing to expand the availability of short-term insurance plans, offering a cheaper health coverage option for consumers, while taking another step to undercut Obamacare.

The Department of Health and Human Services proposed allowing short-term plans to be sold for coverage periods of up to a year, up from the current maximum of three months set by the Obama administration. The plans would also be allowed to offer far less comprehensive coverage than plans sold under the Affordable Care Act.

The short-term plans are likely to appeal to healthier individuals who don’t think they need full coverage, potentially drawing them out of Obamacare’s markets. Combined with earlier moves by the Trump administration -- such as ending the ACA requirement that all people buy health coverage or pay a fine -- the latest proposals could result in higher costs or fewer options for individuals who still want to buy the more comprehensive Obamacare plans.

The Administration said its goal is to give people more insurance options at a time when premiums have been rising.

Bloomberg 

“It’s one step in the direction of providing Americans with health insurance options that are both more affordable and more suited to individual and family circumstances,” HHS Secretary Alex Azar said on a conference call with reporters. “We need to be opening up more affordable alternatives to the all too often unaffordable Affordable Care Act health insurance policies.”

‘Young or Healthy’

The administration, in the proposed rule announced Tuesday, said the short-term plans may lack some Obamacare protections such as required coverage of pre-existing conditions, and coverage for a broad array of services such as maternity care, hospital stays and prescription drugs. But it anticipates that most of the individuals who switch to the plans will be “relatively young or healthy.”

The proposed rule builds on an executive order the president issued last year. The health insurance industry has been divided on the plans, with some insurers already offering them, while others worry they could undermine the ACA’s individual market.

UnitedHealth Group Inc., the biggest U.S. health insurer, already offers short-term coverage, and has said it would explore expanding offerings. Two major industry lobby groups, America’s Health Insurance plans and the Blue Cross Blue Shield Association, have warned that the short-term plans could harm state insurance markets.

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Source:
Bloomberg News (20 February 2018). "Trump proposes bigger role for skimpy insurance, undermining ACA" [Web Blog Post]. Retrieved from address https://www.employeebenefitadviser.com/articles/trump-proposes-bigger-role-for-skimpy-insurance-undermining-aca?feed=00000152-175f-d933-a573-ff5f3f230000