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The consumer price index (CPI) is an economic statistic used to measure price changes over time. When economists calculate CPI, they generally track the price changes of a representative basket of goods, which includes items such as food, transportation, clothing, healthcare, and education. While the CPI is a useful tool for tracking inflation, economists may also calculate a more specific CPI for individual industries. For example, the medical CPI measures inflation only within the healthcare industry, and is calculated based on prices of doctor's visits, hospital bills, medicine, and equipment. Historically, the medical CPI has been consistently higher than the standard CPI, which suggests that prices for medical services increase more rapidly than prices for other goods.
Economists and industry professionals can calculate medical CPI in a number of different ways. This figure may be used to track inflation at the national level, or within a specific city or region. It can also be used to track prices for different types of medical services. For example the medical services CPI measures the pace of inflation for professionals services, hospital stays and insurance premiums. The medical commodities CPI measures inflation for goods only, such as prescription drugs, medical equipment and supplies.
The United States (US) Bureau of Labor Statistics (BLS) provides some of the most widely-cited statistics related to the CPI and medical CPI. To calculate CPI, the BLS collects price data for each season or year, then compares this information to prices from previous periods to calculate price change. Price changes within certain fields, such as insurance premiums or hospital costs, may be weighted. The average price change is then calculated to determine medical CPI in comparison to a base year. The CPI for a base year will always be 100, while a 15 percent inflation rate compared to that base year would be shown as 115.0.
Standard CPI provides important information into the cost of living, which can impact the quality of life for people within a society. A medical CPI that's growing more rapidly than the standard rate of inflation can be a warning of problems to come. If medical prices continue to outpace inflation, people have trouble affording basic care, which can lead to a lower quality of life and issues with public health. Changes in medical CPI can signal lawmakers of the need for new policies to make medical care more affordable.
Some critics argue that the medical CPI is not an accurate indicator of inflation within the healthcare field. For example, this statistic does not reflect changes to the quality of medical care, which may justify higher costs. It also tends to reflect list prices for medical goods and services, rather than the actual costs, which tend to be lower due to the effects of health insurance discounts.
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