A Longer Look at Medical Inflation

Fight disinformation: Sign up for the free Mother Jones Daily newsletter and follow the news that matters.


Eric Morath of the Wall Street Journal reports today that “U.S. health-care costs fell in May for the first time in almost four decades, the latest evidence that government policies and an expansion in generic drugs are constraining prices.”

Maybe. But I’d like to push back on this once again. The chart on the right shows real medical inflation—that is, medical inflation above and beyond overall inflation. As you can see, over the past 30 years it’s been on a noisy but fairly steady downward path. Each peak is lower than the previous one, and the same is true of each trough. If anything, though, this trend has slowed a bit over the past decade. It’s still on a downward slope, but it strikes me as unlikely that government policies have had an awful lot to do with this.

For a somewhat more pessimistic view, take a look at the chart below, which goes back 60 years. Aside from the noise, what you mainly see is a spike in the 1980s, followed by a reversion to the long-term average of about 1.5 percent. In other words, it’s possible that we overreacted to what turned out to be a fairly short-lived swell from about 1983 to 1993 and are now overreacting to the fact that we’ve returned to our long-term average. If this view is accurate, it means that medical inflation has been outrunning overall inflation by about 1.5 percentage points ever since the 1950s, and, roughly speaking, that’s still the case. There’s been a bit of a slowdown over the past decade, but only a bit.

AN IMPORTANT UPDATE

We’re falling behind our online fundraising goals and we can’t sustain coming up short on donations month after month. Perhaps you’ve heard? It is impossibly hard in the news business right now, with layoffs intensifying and fancy new startups and funding going kaput.

The crisis facing journalism and democracy isn’t going away anytime soon. And neither is Mother Jones, our readers, or our unique way of doing in-depth reporting that exists to bring about change.

Which is exactly why, despite the challenges we face, we just took a big gulp and joined forces with the Center for Investigative Reporting, a team of ace journalists who create the amazing podcast and public radio show Reveal.

If you can part with even just a few bucks, please help us pick up the pace of donations. We simply can’t afford to keep falling behind on our fundraising targets month after month.

Editor-in-Chief Clara Jeffery said it well to our team recently, and that team 100 percent includes readers like you who make it all possible: “This is a year to prove that we can pull off this merger, grow our audiences and impact, attract more funding and keep growing. More broadly, it’s a year when the very future of both journalism and democracy is on the line. We have to go for every important story, every reader/listener/viewer, and leave it all on the field. I’m very proud of all the hard work that’s gotten us to this moment, and confident that we can meet it.”

Let’s do this. If you can right now, please support Mother Jones and investigative journalism with an urgently needed donation today.

payment methods

AN IMPORTANT UPDATE

We’re falling behind our online fundraising goals and we can’t sustain coming up short on donations month after month. Perhaps you’ve heard? It is impossibly hard in the news business right now, with layoffs intensifying and fancy new startups and funding going kaput.

The crisis facing journalism and democracy isn’t going away anytime soon. And neither is Mother Jones, our readers, or our unique way of doing in-depth reporting that exists to bring about change.

Which is exactly why, despite the challenges we face, we just took a big gulp and joined forces with the Center for Investigative Reporting, a team of ace journalists who create the amazing podcast and public radio show Reveal.

If you can part with even just a few bucks, please help us pick up the pace of donations. We simply can’t afford to keep falling behind on our fundraising targets month after month.

Editor-in-Chief Clara Jeffery said it well to our team recently, and that team 100 percent includes readers like you who make it all possible: “This is a year to prove that we can pull off this merger, grow our audiences and impact, attract more funding and keep growing. More broadly, it’s a year when the very future of both journalism and democracy is on the line. We have to go for every important story, every reader/listener/viewer, and leave it all on the field. I’m very proud of all the hard work that’s gotten us to this moment, and confident that we can meet it.”

Let’s do this. If you can right now, please support Mother Jones and investigative journalism with an urgently needed donation today.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate