(Bloomberg Business) — The price of health care has grown more slowly than core consumer prices — what Americans spend on everything except food and energy — over the past five years. It’s the first time that’s happened since record-keeping started in 1959. That’s a remarkable break from decades of health-care prices outpacing inflation, but consumers shouldering a greater share of their medical costs may not notice the difference.
Goldman Sachs economist Alec Phillips pointed out the milestone in a research note on July 22. His analysis uses a broad measure of health-care prices, including what health providers charge government programs such as Medicare and Medicaid.
The price of health care typically lifts overall inflation, but in recent years it’s been an anchor weighing down overall price growth. What’s behind the slowdown?
Some of it is from government-dictated reductions in Medicare and Medicaid payments. Wage growth in the health-care sector has also been slow since the recession, Phillips notes.