Inflation spurred by the COVID-19 pandemic has affected everything from eggs to gasoline. Many would thus expect it to severely impact the health care industry, which has had to bear the additional costs of fighting against the virus.
But it turns out that is not the case. ThePeterson-KFF Health System Tracker, an organization which tracks health care cost and quality, found that “in October 2022 overall prices grew by 7.7% from the previous year, while prices for medical care increased by 5.0%.”
Yet while this may seem to be good news, customers may see health care prices continue to spiral up due to a variety of factors. Tackling this challenge will continue to be a major issue for consumers, providers, and governments.
Why Prices are rising
For all the negative effects COVID-19 has had on the medical industry, it is not the direct cause of rising costs. That continues to be labor costs. The medical industry has been facing a continued labor shortage even before the pandemic, especially as the population ages and demand for health care continues to rise.US News states that by 2025, there will be a shortage of 1.1 million nurses, in addition to further shortages in other vital positions.
And while inflation may not have impacted health care as much as other industries, it is possible that this is due to a lag. The nature of the health care business, with contracting and renewing cycles, means that providers cannot easily increase prices as in other businesses. But a possible scenario is that in a few years down the line, health care prices could suddenly shoot up just as inflation for other goods has begun to decline.
Health care prices may not have grown as much as other prices recently. But over the long term going back to 2000, Peterson-KFF found that they have risen by 110%, compared to 73% for all goods and services. And when one considers a growing labor shortage, increased demand, and a potential for inflation to hit the industry at a later point, everyone should expect costs to continue to rise even faster than other goods.
What is to be done?
Solving health care costs will be a major cooperative effort. Health care executives and hospitals should look into improving productivity gains, in part by investing in technology and reducing wastage. If the treatment and claim processes could be done faster with less documentation, that would cut costs which could be passed on to the consumer.
Customers may decide to turn to alternative treatments such as Taylor Chiropractic, or otherwise take better care of themselves. An aging population should be a population more aware that they cannot take the same health risks which might have been possible a few years to a decade ago, especially in the aftermath of the pandemic.
Rising healthcare costs are not an issue which will be easily solved, and health care providers and customers will need to work and make sacrifices. But the alternative is spiraling costs, fueled by inflation, labor costs, and other concerns which could threaten the very industry.