By one measure, hospital and physician prices did not slump last year, instead growing faster than the annual average for the last decade. By another, broader measure, the price growth ebbed in 2010.
Indexes show prices grew faster or lost steam
The Bureau of Labor Statistics, the federal agency that tracks prices paid by households and producers, published 2010 figures this month for two measures of inflation that capture the change in prices from one December to the next. They offer two snapshots of how hospital and physician prices for households, insurers, Medicare and Medicaid changed as the economy slowly emerged from the recession.
Consumer hospital prices increased 7.6% last year, roughly the same as the prior year and ahead of the 6.9% average annual growth since 2000. The agency’s consumer price index seeks to measure the prices paid by households by tallying out-of-pocket spending—such as deductibles or bills paid by the uninsured—as well as insurers’ share of payments for plans that require out-of-pocket spending. Not included are prices paid by insurance for patients with no financial obligations for medical care.
Physician consumer prices grew 3.4% last year, more rapidly than the year before and also faster than the average of 3.1% per year since 2000, the consumer price index figures show.
The increases easily outpaced overall inflation last year. Consumer prices for food, rent and other household expenses increased at a sluggish 1.5%. Inflation slid to 0.8% once volatile prices for food and gas were removed.
But as viewed through the agency’s other measure, the producer price index, hospital and physician price gains faded. The more far-reaching measure includes prices paid by patients (insured or not) and public and private insurers, regardless of whether patients must foot some of the bill. Figures for the past four months of the year are preliminary.
The producer index suggests acute-care hospital prices slowed to 2.1% from 3.8% the prior year and below the average of 3.5% for the six years for which the agency published comparable data.
For physicians, the producer price index also showed slower growth: 2.3% compared with the previous year’s 2.7%, yet faster than the average of 1.9% per year during the last decade.
Paul Ginsburg, an economist at the Center for Studying Health System Change, cautioned the notable difference between the two measures of hospital prices—7.6% and 2.1%—suggests the figures may not be reliable.
Ginsburg, president of the Washington-based health policy not-for-profit, said the gap appears too wide to be solely because the two indexes measure prices differently. It suggests methods, not design, could be the culprit and underscores how difficult it is to estimate hospital pricing trends, he said.
One significant trend not captured by the producer price index is the sharp decline of patients with commercial insurance, which typically pays more for medical care than Medicaid. The sample used to calculate the producer price index indirectly results in a ratio of hospital from Medicare, Medicaid and all other payers, according to a BLS economist. That sample was last updated in July 2008, six months into an 18-month recession. More than 6 million people lost private health insurance in 2009. Meanwhile, the safety-net insurer saw enrollment jump 7.5% that year.
Federal projections are not yet available for 2010 U.S. spending on healthcare, which is fueled by prices, population and the amount and intensity of medical care patients receive. In estimates released by CMS this month for 2009 personal health spending, prices grew more slowly, but inflation accounted for 60% of spending growth as demand for care dropped during the recession. (Jan. 10, p. 6)
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