Another Surge in CPI Medical Care Costs


The cost of medical care services jumped 0.9% in August and is up 4.3% from a year ago.

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.1 percent in August on a seasonally adjusted basis after rising 0.3 percent in July, the U.S. Bureau of Labor Statistics reported today.

  • Over the last 12 months, the all items index increased 1.7 percent before seasonal adjustment. Increases in the indexes for shelter and medical care were the major factors in the seasonally adjusted all items monthly increase, outweighing a decline in the energy index.
  • The energy index fell 1.9 percent in August as the gasoline index declined 3.5 percent. The food index was unchanged for the third month in a row.
  • The index for all items less food and energy rose 0.3 percent in August, the same increase as in June and July. Along with the indexes for medical care and shelter, the indexes for recreation, used cars and trucks, and airline fares were among the indexes that increased in August. The indexes for new vehicles and household furnishings and operations declined over the month.
  • The all items index increased 1.7 percent for the 12 months ending August; the 12-month increase has remained in the range of 1.5 to 2.0 percent since the period ending December 2018. The index for all items less food and energy rose 2.4 percent over the last 12 months, its largest 12-month increase since July 2018. The food index rose 1.7 percent over the last year while the energy index declined 4.4 percent.

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

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Falling Energy Costs Keep CPI Tame

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Classic Late-Stage Inflation?

I disagree with Rosie's assessment. If there was an energy surge I would be more inclined to accept his view. That's not at all what's happening.

Continued Surge in Medical Care Services

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Somehow that looks like early-stage inflation, mid-stage inflation, and late-stage inflation.

Continuous Understated Medical Inflation

Medical care has continuous and understated inflation.


You bet. Dramatically understated in fact.

Ask any of those buying their own medical insurance how much their costs have risen. It's likely to be in the 50% to 200% range, not 4.3%.

The BLS averages that all in. The BLS also averages in the price of Medicare. But how much is the government paying doctors and hospitals?

How much costs are companies eating when they offer coverage?

Those are the real costs. The BLS just looks at the costs to the average individual, ignoring all the rest of the true costs.

Reported medical cares costs have soared even despite these huge distortions (lies if you prefer).

Role of Government

Eventually, the price of everything government touches soars out of control.

Consumers Not Struggling

Sure, if you ignore a whole bunch of things including bankruptcies, suicides, and rising credit card debt, consumers are OK.

Head-Scratching Logic

Finally, here's one on the American Dream:68% of Millennial Homeowners Regret Buying a Home

Consumer stress?

You bet.

Mike "Mish" Shedlock

Comments (87)
No. 1-13

At least the socialised NHS here in the UK gives you an equal share of the misery for less money.


Millenials shouldn't be buying homes. Who made them do this ?


Where in the CPI is insurance? It keeps going up in leaps. It sure must be a major cause of all local sourced inflation.


In other words, about half the population is one medical event away from a financial emergency.


It is inevitable that medical care must continue to rise faster than inflation due to governmental involvement. Even though we don't have socialized medicine, governments do mandate what must be included in policies, which prevents lower cost options from being offered which exclude certain things.

Second, and more onerous, you have to remember that there is always a question, "How much medical care is a person entitled to?". Socialized medicine answers the question "a committee will decide what you can have, and what you can't have", and then no one can have the things it deems to be too expensive. In the US, the answer is very different. The answer has always been "everyone is entitled to the absolute best care, regardless of price". The enforcement arm is the plaintiff's bar, and if a doctor or hospital gives anything other than the absolute best care, he is at risk of being sued.

The advantage of the US answer is that over the last fifty years we have had amazing medical advances. Massive amounts are spent on medical research because if something new, and better, is developed, everyone will buy it, and they can make a profit. The disadvantage, however, is that the cost of infinite healthcare is also infinite. Since we are unwilling to consider other answers than "everyone is entitled to the absolute best", the inevitable result is that healthcare must continue to rise faster than inflation, until it eventually breaks the economy, and forces a different answer.

Since the only possible answer for a system broken by governmental involvement is more governmental involvement, there is no reason to consider free market solutions, as they are impossible. Thus, eventually we have no choice but to go to socialized medicine. It could be "medicare for all", or some all new system, such as what they have in Canada, but in the end it must have a different answer, and that will be that a committee of some kind will decide what healthcare we can have, and what we can't have. As a side casualty, medical research will have to dramatically slow, and drop to a more sustainable level.

Until we get to that point, we may additional interim solutions that, like Obamacare, do nothing to reduce costs, and instead try to fund the upward spiraling costs by changing who gets stuck with the bill.

Tony Bennett
Tony Bennett

Redbook yearly same store sales growth in the past 3 weeks.

August 24: 5.7% August 31: 6.5% September 7: 6.4%


I would be very hesitant to use same store sales to prove anything. Some 8000 stores already closed this year. Even healthy chains routinely close under performers ... making remaining store numbers look better. Kudlow babbled about same store sales earlier this year ... didn't want to talk total sales, I suppose.


"Eventually, the price of everything government touches soars out of control."

Well, I wouldn't use the generic "government". I'd use the US federal government. Many governments at the state and local level and even foreign governments are quite capable of having well-managed governments.

As for medical insurance, the price might not go up of the policy, but what if the co-pays/deductions/max out of pockets go up? I'm betting that is not included and insurance is going up by leaps and bounds.

Country Bob
Country Bob

I am going to send this story from USAToday yet again

The fraud known as Obamacare supposedly solved this. What really happened is Obama and Pelosi and Reid made a terrible system a 1000x worse. And then they exempted themselves like the corrupt cowards that they are.

I have no idea where some incompetent idiot came up with 4.3% annual rate. I know Mish is quoting the BLS numbers, he isn't the source. The BLS needs to stop lying.

Doctors and hospitals need to be sued for price gouging. And doctors need to be publicly dragged away in handcuffs for fraud. Plenty of Doctors bill for services that never even happened. Its fraud, stop pretending otherwise.

Medical prices charged have nothing to do with actual costs. Way too much fraud gets worked through the medical system. A corrupt Chicago politician then wanted to force the public (but not Washington DC!) to finance this fraud under penalty of jail time??? Are you f'ing kidding me?


The US spends around 18% of gdp on health care. All other developed nations spend between 8% and 11% of gdp on health care. All the other nations have better health outcomes, and longer life expectancies; plus they cover almost everyone in their countries. The US covers perhaps 80% of its population? Eventually the US will adopt some form of single payer system like the other countries. But not until they try everything else for maybe 20 years.

Country Bob
Country Bob

According to two studies: one by Mayo Clinic and a second from Kaisser Permanente (approximate percentages):

30% of health outcomes is determined by genetics -- not much anyone in any country can change about that in your lifespan

30% is determined by your diet (eating healthy food)

30% is determined by lifestyle (primarily stress and sleep)

... and onlyabout 10% is a function of medical care

Both studies reached the same conclusion, even though both are US based medical organizations. Less than 10% of your health outcome is determined by health care.

Other countries have better health outcomes because they eat better, they get more sleep and live with less stress. Even the fast food in other countries is very different from fast food in the USA.

Throwing trillions into single payer fraud is not going to address the biggest determinants of health care -- and there is every reason to think the US congress will make matters much much much worse.


Part of the problem is that Americans seem to believe that health care is a market...its many things but a market it is not, except for simple primary care, and even then, you pick your doctor and then do what he wants you to do.

The only way health care is a market is in basic primary care, thereafter the "cost" of changing your provider is prohibitive.

It is one of the many reasons that health care is so much more expensive in the US, despite a substantial portion of the population not being covered. The same is true for drug costs

Anyway, like a foreigners, I feel like Don Quichotte, Americans will never agree! It's like your love for guns...

Inflation in healthcare is higher because none of it is "manufactured" in China...doemstic service costs remain high and are rising.


Decline in energy prices?Where?Oh I see it's moar big govt (bs)pretend,play make believe data,my bad......carry on!


If you don't want Government running your health system then look at Sweden. The Swedish system s free at the point of need but is unique in that it runs on a voucher system. The Swedes can use their vouchers with a doctor of their choice and hospital of their choice. Of course this is one socialist answer which is not, by any stretch of the imagination, part of a command economy.