Medical Care Costs Soaring Out of Control

0
163

by Mish Shedlock, The Maven:

The cost of medical care services dramatically outpaces stated CPI inflation measures.

Once again the BLS tells us inflation is under control. Once again, close inspection suggests something else.

Let’s investigate, starting with the BLS Consumer Price Index Report for December 2019.

  • According to the BLS, the Consumer Price Index for All Urban Consumers (CPI-U) rose 0.2 percent in December on a seasonally adjusted basis after rising 0.3 percent in November.

  • The gasoline index increased 2.8 percent in December. The index for all items less food and energy rose 0.1 percent in December after increasing 0.2 percent in November.
  • The All Items index rose 2.3 percent over the last 12 months. So did the index for all items less food and energy, the same increase as the periods ending October and November. The food index rose 1.8 percent over the last 12 months, while the energy index increased 3.4 percent.

CPI Month-Over-Month and Year-Over-Year

Hooray! Inflation Tame

Hooray, inflation as measured by the BLS is only up 2.3% from a year ago.

The Bloomberg consensus estimate was 0.3% month-over-month so 0.2% looks tame. The core inflation measure (CPI excluding food and energy) rose only 0.1% vs the expected 0.2%.

But does your basket match this?

CPI Percentage Weights

It’s when you dig into details you find disturbing trends, like the lead chart and this.

Medical Care Costs Month-Over-Month

Medical Care Cost Detail

On the rare occasions the month-over-month price drops, costs the following month tend to jump 0.6% to 0.8% or higher.

Medical Insurance Quotes

I posted these quotes last month, but it’s worth another look after this gloomy report.

I went to NerdWallet for some quotes. My base case was a husband and wife making a combined $100,000, both aged 60, non-smokers, with no dependents.

Same Couple Making $60,000

Synopsis

  • For a couple, aged 60, making $100,000 per year, “affordable” care costs $19,776 right off the top. Then there is a max out of pocket expense of $8,150 per person. Yes, per person.
  • For a couple, aged 60, making $60,000 per year, “affordable” care costs $3,804 right off the top. Then there is a max out of pocket expense of $8,150 per person.

The BLS tells us, medical care is only 6.654% of the “average” household expense.

Average includes all those on medicaid and medicare. It also includes those on company plans.

Read More @ TheMaven.net