Consumers hopeful to save money in their health spending, finally

The inflation tables have turned. What does this mean for health insurance consumers? For possibly the first time in American history, one place they might be able to save money is in health care.

Core inflation rates rose 7.7% this year, according to the Bureau of Labor Statistics. But when broken down further, the cost of medical expenses has only risen 5%. When further explored, most healthcare inflation concentrated in medical equipment at 5.1%, nursing homes at 4.2%, and hospitals at 3.4%. The lowest was found in prescription drugs at 2.2% and physician care at 1.8%.

In the past, medical inflation happened faster and sooner than other essentials, yet this hasn’t happened as of late. This discovery presents an opportunity for consumers to take advantage of savings now before inflation hits healthcare.

Why might this be? Insurance companies were more profitable in the throes of the pandemic: consumers not receiving emergent care postponed medical treatment until the dust settled. And so far, although people are going back to using their health benefits, the cost of care has yet to catch up with these increases in use.

This will not last forever, though. Once updated data mixes into the consumer price index, providers will have to raise prices to remain profitable. Surely, some of that increase will be passed on to the consumer.

Keeping the data in mind, consumers should make decisions to get their healthcare ducks in a row before inflation catches up. Any looming elective procedures might be a good option to tackle. Maybe consumers look into replacing needed medical equipment or getting the whole family in for a checkup. In short, a now instead of later attitude could save consumers some money in the long run.

What can we expect in the future for health costs? Private insurance tends to raise prices faster than public insurance, and the data used to determine prices is generally based on prices from previous years. So when 2021 and 2022 data comes in, there is a strong bet healthcare costs will catch up to the rest of the economy.