Is Health Care Inflation Easing?

Michael Mandel

When I looked at this morning's PPI release from the BLS, the low numbers for health care inflation jumped out at me.

Change in producer prices
Mar '04-'05 March '05-'06
physician offices 1.7% 1.2%
medical/diagnostic labs 4.4% 0.0%
imaging centers 2.0% -0.1%
home health care 1.1% 0.9%
hospitals 3.8% 3.8%
nursing homes 3.7% 2.5%

Now, these numbers have to be interpreted with care, but the slowdown in the cost of imaging is particularly noteworthy, since that has been one of the big areas of fast growing costs. That may be due to competition. Similarly, the slowdown in nursing home and home health care inflation is also important, if it continues.

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