May 29, 2001 (The Editor’s Desk is updated each business day.)

Medical care inflation continues to rise

The percent change in the consumer price index for medical care continued an upward trend in 2000, climbing 4.2 percent. This followed increases of 3.7 percent the previous year, 3.4 percent in 1998 and 2.8 percent in 1997.

[Chart data—TXT]

Hospital services charges were up 6.3 percent in 2000 after a 5.1-percent rise during the previous year. Several factors apparently contributed to this increase including a growing shortage of nurses, leading to larger increases in nursing charges; accelerating energy inflation; upgrading of technologies for onsite diagnosis, surgery, and information retrieval; and Medicare restrictions of allowable charges and reductions in Medicare reimbursements that have led many hospitals to increase basic fees in an effort to recoup costs.

Physicians charges for service also rose more quickly during 2000, rising 3.9 percent, compared with 2.6 percent in 1999. Prescription drugs and medical supplies increased just 3.6 percent last year, following a 6.1-percent rise in 1999.

As a comparison, the CPI for all items rose 3.4 percent in 2000, following increases of 2.7 percent in 1999 and 1.6 percent in 1998.

These data are produced by 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. More information on consumer price changes can be found in "Consumer inflation higher in 2000" by Todd Wilson, Monthly Labor Review, April 2001.