The cost of medical care is surging again after lull during the pandemic — and adding tinder to the high inflation already burning up the U.S. economy.
Medical expenses have been one of the biggest contributors to U.S. inflation for decades. Yet prices almost flatlined during the pandemic as people avoided hospitals and doctors and nurses focused mostly on coronavirus patients.
With the pandemic fading, prices are rising quickly again. Doctor offices and hospitals are seeing more customers, but they are also paying more for supplies whose prices have risen due to high inflation.
The cost of medical care rose sharply again in September to push the increase over the past year to 6% — the largest gain since 1993.
Read: Consumer prices jump again and CPI shows little relief from high inflation
Just one year ago, medical prices were rising at a meager 0.4% yearly pace.
Rising medical expenses could make it harder for the Federal Reserve to slow inflation since these costs are harder to reverse.
The cost of health care rose an average of 3.5% a year from 2000 to 2019 — almost double the rate of U.S. inflation overall.
Medical care is one of the two biggest drivers of inflation — along with housing — in the consumer price index. These are major household expenses and they are likely to keep going up for a while.
“For the second month in a row, it is shelter costs and medical care driving the increase [in CPI],” said chief economist Stephen Stanley of Amherst Pierpont Securities. “These components are likely to continue to accelerate for at least another six to nine months.”
There is likely to be some good news coming, however.
For one thing, the housing market has tanked in response to soaring mortgage rates. That’s likely to help lower costs. A slower economy would also likely out downward pressure on rents.
Medical expenses are not as susceptible to the ebb and flow of the economy, however. People always need health care, in good times or bad.