Inflation is 8% and Coming to Healthcare

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Milton Friedman famously observed: “Inflation is taxation without legislation.”?

The current consumer inflation rate is 8% and with a gap in timing, inflation is coming to healthcare.

Healthcare inflation generally lags overall inflation because of the large number of long-term agreements in the healthcare industry such as reimbursement rates with governments and insurance companies, labor contracts, and pharmaceutical and supply agreements.?

Consumers will be faced with healthcare inflation when they can least afford it.?For the last 60 years, the personal savings rate (the percentage of income after taxes and spending) has averaged around 9%.?

The current personal savings rate in 2022 has fallen from 6% in January to 4.4% in April and it is nearing the low of 2.2% recorded in July 2005.

Adding to the burden on consumers, CNBC reported that employer-based health insurance deductibles have risen nearly 70% in the last 10 years.?Further, the 2022 Medicare Trust Funds report shows that funds will be depleted this decade, influencing benefit structure and deductible levels.

Professor Friedman may not have envisioned it, but in this case, inflation will accelerate legislation to address health care affordability, likely during this decade.?

Healthcare leaders will require their best innovative thinking to prepare for the growing impact on healthcare affordability. The upside reward may be a more balanced approach by Congress to shape future healthcare legislation.?

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