October 26, 2022
  • An article in the Wall Street Journal examines how a “methodological quirk” is turning health insurance from a driver of inflation into a deflationary drag. The Department of Labor bases the price of health insurance in large part on health-insurer profits, which are reported with a lag of about 10 months. Thus, this year’s updated data are based on 2021, when consumers caught up on preventive care and elective procedures. One expert estimates that the health-insurance index will decline 38 percent by September of next year from this past September, meaning health insurance would go from adding around 0.38 percentage point to the 12-month increase in core inflation as of last month, to subtracting about 0.42 percentage point by next September. However, economists are quick to note that any drop in health-insurance prices in the consumer price index might be offset by broader price pressures building in medical services as labor costs climb. (Article here)