Medical Inflation on Intercept Trajectory with Wage Earners

John Commins, October 25, 2010

Standard & Poor's came out with a notable—if unsurprising—annual report last week showing that medical inflation rose 7.3% in the 12 months ending in August, a pace that is nearly seven times that of the 1.1% increase in the Consumer Price Index for the same period.

This is not surprising because the runaway growth of medical inflation is a trend that has gone on for decades or longer. U.S. Bureau of Labor Statistics data show that medical inflation grew by 48% in the last 10 years, while the CPI grew at 26%.
Think about the ramifications of this trend, which will significantly worsen the physical and financial health of tens of millions of Americans.

Imagine a chart with two lines drawn on it. The top line, holding horizontal with tiny annual increases, is the average income for Americans. The bottom line, rocketing upward like a surface-to-air missile on an intercept course, is the rising cost of healthcare. How long before those two lines collide? What happens when they do? If this trend continues—and there is nothing to suggest that it won't—is it conceivable at some point in the future that every dollar an American worker earns will be spent on healthcare?

John Commins

John Commins is a senior editor at HealthLeaders Media.


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