June 20, 2006 (The Editor’s Desk is updated each business day.)

Medical care inflation in 2005

The medical care price index increased 4.3 percent last year, about the same as the 4.2-percent rise in 2004.

[Chart data—TXT]

Prices for prescription drugs, internal and respiratory over-the-counter drugs, dental services, and eyeglasses and eye care each showed larger increases in 2005 than in the prior year.

Medical care commodities prices rose 3.7 percent last year, up from a 2.2-percent increase in 2004. Prices for prescription drugs and medical supplies rose 4.4 percent last year, after rising 3.5 percent in 2004. Accelerating prices charged for brand name drugs were responsible for the higher increase in the prescription drugs index.

The medical care services price index rose 4.5 percent in 2005, down from 4.9 percent in the earlier year, reflecting deceleration in the indexes for physicians’ services and inpatient hospital services. Physicians’ services fees rose 3.1 percent last year, following a 4.0-percent rise in 2004. Inpatient hospital services charges rose 5.3 percent last year, compared with 5.6 percent in 2004.

These data are from the BLS Consumer Price Index program. Annual percent changes are December-to-December changes. Details on the calculation of the medical care CPI are in Measuring Price Change for Medical Care in the CPI. For additional information on consumer price changes in 2005, see "Consumer prices rose 3.4 percent in 2005, about the same as last year," by Todd Wilson, Monthly Labor Review, May 2006.