America’s great healthcare hyperinflation is over

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America finally seems to be making real headway in reining-in its ridiculously high healthcare costs.

As a reminder, for decades US healthcare inflation outpaced the overall rise of prices. For instance, the inflation indexes included in personal consumption and income data—the best data series to use for US healthcare prices because it captures spending by companies—show healthcare prices surged by 215% over the past 30 years. That’s far faster than overall price increase of 100% over the same period.

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But lately things have changed. The annual rise of healthcare prices has slowed to some of the lowest levels in recent memory. Healthcare prices rose just 1.7% in July, compared to the prior year. (From 2000 to 2010, annual price increases averaged more than 3%.) In fact, since the end of 2012, healthcare inflation has been slightly below overall US inflation.

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This is wonkish, but it matters. Runaway healthcare spending, which has been widely expected to surge as the Baby Boom generation gets increasingly older, has been a huge driver projections for scarily large long-term US deficits. But recently the government has revised its estimates for spending on Medicare, the large US healthcare program for the elderly, sharply lower—in part due to slowing health care inflation.

The slowdown in healthcare inflation isn’t solely because of the giant healthcare overhaul known as the Affordable Care Act, and better-known as Obamacare. There are other elements at play. For instance a lot of expensive blockbuster drugs have lost patent protection recently. Generic versions have helped bring down pharmaceutical costs. Some have argued that the spending slowdown really started back in 2007, and largely reflects the economic slowdown of recent years. The nonpartisan CBO disagrees with that assessment, as do other academics.

At any rate, it’s clear what the White House thinks. “Here’s what I know—that we have millions of people [insured] who didn’t have insurance before, and healthcare inflation is the lowest it’s been in 50 years, for four consecutive years, corresponding to when we passed the law,” President Obama told the Economist recently.