Understanding Inflation Rates

Medicare Part D’s new out-of-pocket cap is changing patient behavior. Plans may not be ready for the consequences--a 27% spike in drug spending. --- A new Milliman analysis shows that through the first half of 2025, gross drug costs per member per month (PMPM) in the non-low income (NLI) Medicare #PartD population rose 27% year-over-year. If current trends hold, 2025 may end with a 36% annual increase over 2024's second half. --- The Inflation Reduction Act’s $2,000 out-of-pocket cap is likely a major driver. Removing cost barriers predictably improves access, but it's also reshaping utilization patterns. NLI members, now shielded from catastrophic costs, are using more specialty therapies. That’s especially clear in classes like antineoplastics and biologics for atopic dermatitis, where gross costs and utilization both soared over 50%. In contrast, low-income (LI) members (whose benefit structure changed less) show far more stable trends. Group retiree (EGWPs) NLI specialty trends are far more muted, reinforcing the IRA’s outsized influence in the individual PDP and MAPD markets. --- The upcoming challenge is for plan pricing and risk adjustment. The 2025 RxHCC model is based on 2022 data, assuming historical cost relationships between LI and NLI enrollees that are no longer accurate. If CMS doesn’t adjust, plans could face serious misalignments between actual costs and revenue, and premiums could increase in 2027 when this year's claims impact bids. --- The IRA OOP max improved access and reduced OOP spending for high-spend members, but it also exposed major weaknesses in how the market adjusts for risk in Medicare Part D. How should CMS and plans respond for 2027?

Medicare Payments to Doctors Have Dropped, Even Before Inflation According to the American Medical Association’s own records, Medicare pays doctors less today in raw dollars than it did in 1998. 1998 Medicare Conversion Factor: $36.69 2024 Medicare Conversion Factor: $33.27 That’s about a 9% cut in nominal terms (before even considering inflation). Inflation Makes It Even Worse The cost of living has nearly doubled since 1998: 1998 Consumer Price Index (CPI): 163.0 2025 CPI: 323.0 Total inflation: +98% That means $1 in 1998 buys almost twice as much as $1 today. When you adjust Medicare payments for inflation, the picture is brutal: Nominal payments are down ~9%. After inflation, doctor pay under Medicare has effectively fallen by about one-third since 2001 (AMA analysis). Why This Matters Every year, doctors face rising costs, rent, staff salaries, malpractice insurance, medical supplies, all driven higher by inflation. But Medicare, bought and paid for by health systems and carriers, payments haven’t just failed to keep up; they’ve moved backward. This isn’t an abstract accounting problem. It’s one of the key reasons independent practices sell to PE and Health Systems, physicians leave medicine, and patients struggle to find care. And Congress could fix it. But that would require physicians to pay them $1B instead of insurance and health systems.

Rising insurance premiums should not be explained by medical loss ratio alone. MLR is useful, but it is only one indicator. A more credible assessment should also consider claims cost per insured life, case mix, provider price growth, utilisation growth, administrative expense ratio, underwriting margin, capital adequacy, and the out-of-pocket burden shifted to patients. To tackle rising insurance premiums, I find it helpful to use a simple 5-part framework: 1. Measure properly Look beyond a single ratio. Separate price growth from utilisation growth, and distinguish real medical inflation from administrative inefficiency or margin expansion. 2. Moderate demand intelligently Use co-payments, deductibles, and benefit design carefully to reduce low-value care, without deterring necessary care. 3. Manage provider incentives Strengthen fee benchmarks, episode-based payment where appropriate, panel governance, and pre-authorisation for selected high-cost services. 4. Monitor insurer behaviour Require greater transparency on expenses, margins, claims denial patterns, and service performance, not just claims payouts. 5. Minimise patient harm Any premium control strategy should protect affordability, access, and continuity of care, especially for patients with genuine healthcare needs. This matters because the same premium increase can mean very different things. It may reflect genuine medical inflation and more appropriate care. But it may also reflect higher operating costs, preserved margins, weak cost control, or greater transfer of financial risk to patients. In healthcare finance, the real issue is not whether spending rises. It is whether the increase is proportionate, transparent, and tied to real value. As Program Coordinator for the Master of Health Management and Policy at Newcastle Australia Institute of Higher Education, I am interested in these questions because they sit at the intersection of policy, economics, regulation, and clinical reality. If you are interested in health insurance, healthcare finance, and the design of sustainable health systems, connect with me. Newcastle Australia Institute of Higher Education https://lnkd.in/gtHAXi8m

That 3.6% inflation number the RBI quoted sounds like great news, except if you’re planning your retirement. The above rate is calculated based on what working families spend their money on: fuel for commuting, groceries for growing kids, the occasional smartphone upgrade. It's a basket of goods and services designed for people still in the workforce, not for those who've already retired. When you're 65, your spending shifts completely.  A much larger share of your monthly budget goes toward healthcare (regular checkups, medications, procedures), rising utility bills, and domestic help to manage your home. They're the essentials that keep life comfortable and dignified as you age. And the problem is that these specific categories inflate much faster than the average basket the government tracks. Healthcare costs in India have steadily risen at 12-14% annually for the last decade. Reasons for this are typically due to increase in medical technology advances and specialist fees. Utilities and domestic help salaries climb at 8-10% every year as workers demand wages that keep pace with their own cost of living. On top of that, the rupee tends to lose 3-4% of its value against major currencies every year, which matters especially if you're spending time abroad or buying imported goods. When you weigh these categories according to how retirees actually spend, your personal inflation rate works out to somewhere between 10-12% per year roughly 3 to 4 times higher than what the headlines report. This gap is what catches most people off guard. Imagine you've planned for ₹5 crore to last your retirement, assuming the official 3% inflation rate. That corpus might feel bulletproof today. But if your real inflation is running at 11%, something alarming happens by the time you're 75. What cost you ₹50,000 per month in your first year of retirement now needs ₹1.5 lakh just to maintain the exact same standard of living. The math is silent but ruthless, and by the time you notice the gap, there's often too little time left to course-correct. When you understand that inflation isn't a single number but a collection of different rates affecting different parts of your life, you can plan accordingly. → Build your retirement model using category-specific inflation rates (not the broad CPI number), so you're planning for the inflation you'll actually face, not the one that gets reported in the news. → Add a 30–40% buffer over whatever you calculate as your "minimum number," because the future has a way of being more expensive than spreadsheets predict. → Diversify your corpus not just across asset classes but also geographically which helps offset the gradual erosion of the rupee Because at the end of the day, that 3.6% number doesn’t tell the whole story. The real inflation most people feel, especially while planning retirement, is much higher than what the Consumer Price Index shows. #RetirementPlanning #NRIFinance #InflationImpact

Recent reports indicate that India's health insurance premiums have exceeded the national health budget, highlighting a significant shift in healthcare financing. While this surge reflects increased awareness and demand for health coverage, it also underscores a pressing concern: the growing disparity in healthcare access. Medical inflation in India has consistently outpaced general inflation, with rates hovering around 13-14% annually. This escalation has led to higher premiums, making quality healthcare increasingly unaffordable for many. Consequently, a significant portion of the population remains underinsured or uninsured, exposing them to financial vulnerabilities during medical emergencies. The government's flagship scheme, Ayushman Bharat, aims to bridge this gap by providing coverage to the economically disadvantaged. However, the reliance on insurance-based models, both public and private, raises questions about the long-term sustainability and inclusivity of our healthcare system. To achieve true equity in healthcare, a multifaceted approach is essential: Enhanced Public Investment: Increasing budgetary allocations to strengthen public healthcare infrastructure. Regulatory Oversight: Ensuring transparency and fairness in premium pricing and claim settlements. Awareness Campaigns: Educating citizens about available schemes and the importance of adequate coverage. #HealthcareEquity #Insurance #PublicHealth #AyushmanBharat #MedicalInflation https://lnkd.in/gcmbBT6N

I hesitated before writing this. Not because the issue is unimportant, but because the moment healthcare costs are discussed, everyone reaches very quickly for the most visible target. The bill. And yes, hospital bills must be examined. Charges must be explainable. Practices must withstand scrutiny. I have no difficulty with that. But I do have difficulty with pretending that the bill is where the story begins, because it usually is not. By the time a patient reaches the hospital bed, many things have already happened. Years of diabetes. Years of hypertension. Delayed screening. Fragmented primary care. Newer treatments. Higher expectations. Insurance products designed around cashless access and reassurance. A system that still pays far more easily for rescue than prevention. So when we say “medical inflation”, we should be careful not to mean only “hospital prices”. They are not the same thing. By all means, examine hospital charges. But examine insurer practices too. Ask whether hospitals are charging fairly. But also ask whether our preventive health strategy and primary care have been effective in making Malaysians healthier. Regulate where regulation is needed. But do not regulate one part of the system while leaving the deeper incentives untouched. The easiest thing is to attack the bill. The harder thing is to understand what produced it. I wrote about this in my column in the New Straits Times. Dr Kamal Amzan PS: CodeBlue picked it up too. Clearly, the bill is not the only thing making its rounds. Link here: https://lnkd.in/dzX4u4uR

When I read that an appointment with a specialist in Australia can now run as high as $1,000, it wasn’t just the fee that stuck with me, it was the story behind it.   As Natasha May at The Guardian reports, specialist fees are surging faster than inflation, and many Australians feel they have no choice but to pay whatever is asked because it can take years to see a specialist in the public system. That sense of powerlessness - of being unable to question or compare fees, especially when unwell or under pressure - is deeply troubling.   Hyperinflation in private specialist fees is not just hurting household budgets. It’s causing people to forego healthcare with untold consequences. It’s also eroding the value of health insurance and blocking access to private hospitals. When people can’t afford to use their health cover, pressure inevitably shifts to the public system, lengthening waiting lists and worsening inequities across the board.   All medical specialists deserve to earn a decent income. But we need a fairer, more transparent system - one where patients have real information, real choice, and confidence that the fees they’re charged are reasonable.   Read more here: https://lnkd.in/gwt9esRn

I’ve been looking at this chart on inflation pricing. Hospital services are up 281% over the last 25 years. TVs are down 98%. While we’ve all known that healthcare is expensive, seeing it zoomed out like this makes the trend undeniable. With ACA subsidies now expired, we're seeing what happens when that cost curve hits real families. I’ve seen some of the real-life stories in CBS News: Noah Hulsman kept the same premium but his deductible went from $750 to $8,450. Loretta Forbes watched her premium jump from $250 to $2,500/month and started rationing her rheumatoid arthritis meds. Nicole Wipp dropped coverage for her whole family except their son because the plan cost more than their mortgage. Premiums are up an average of 26% this year according to KFF, and some have even doubled. Nearly 40% of people are skipping or delaying care because of costs. Healthcare is now the top financial concern for 80% of Americans (ahead of food and housing). For decades, healthcare inflation quietly outpaced wages but subsidies hid some of the gap. With federal policies now shifting, middle-income families are increasingly feeling the actual price of the system. So how do we deliver care when the traditional model prices people out? Virtual care, remote monitoring, AI triage, high-deductible health plans, and other cost-saving measures are all helping. But most of these things are just workarounds and wrappers around the same underlying cost structure of the high acuity sick care industry rightfully serving an aging population, and often very well by the way. What we need for our changing demographics and to make healthcare financially viable is much more systemic change, such as new care delivery models that provide primary care for 1/10th of what it does today a la Apollo Hospitals or Narayana Health in India, permitting reform to reduce compliance costs, state and federal legislation to expand scope of practice for less credentialed healthcare professionals, etc. Here are some real-world examples of companies from across our portfolios that, while albeit ventures, are already meaningfully moving the needle in reducing costs while improving quality:  🔹 Wellsheet and Prolucent: Clinical workforce optimization  🔹Dopl Technologies: Robotics for just-in-time imaging 🔹Aegle and Helm Health : Insurance disruption 🔹Nest Health and Pinch: Home health using nurses and other contingent labor 🔹OpenLoop, Tenovi, an Inc. 5000 Company, and Vytalize Health: Infrastructure for virtual and value-based care 🔹Paloma Health and Tava Health: Specialized virtual care 🔹Troomi: Wellness and preventive care 🔹IgniteData and Leash Bio: Drug discovery and clinical study efficiency

On this #2ndDay, we unpack a hard reality. Medical costs in #Kenya are rising at 11% annually, nearly three times the country’s 4% inflation rate. The latest 2025 data from Smart Applications International Ltd, Association of Kenya Insurers [AKI], ZEP-RE (PTA Reinsurance Company) and the Kenya Healthcare Federation (KHF) confirms that this is no longer a temporary spike. It is a structural business risk. The biggest drivers remain #Outpatient and #Inpatient care, growing at 11% and 10% respectively. Kenya is also tracking closely with the projected global medical inflation rate of 10.3% for 2026. The difference is that many global markets have mature wellness ecosystems and age based pricing models that help absorb these shocks. Most local schemes do not. One insight stands out clearly. Age is becoming a major cost factor. A patient aged 60+ now costs almost twice as much per inpatient visit compared to a child aged 0 to 5. Outpatient costs follow the same trend, increasing steadily with age. Yet many corporate schemes still apply uniform pricing across all members. As workforces and dependants age, this creates hidden financial exposure that many organizations have not fully priced for. There is however one encouraging signal. #Optical costs declined by 3%, showing that effective provider competition and smarter benefit design can help contain costs even in an inflationary environment. The utilization trends are equally important. Children aged 0 to 5 record the highest doctor visit frequency, which then rises again among members aged 60+. This presents a strong case for targeted wellness strategies focused on early childhood care and senior employee health. For #HR and #Finance leaders, the message is clear: ✅ Build healthcare projections using medical inflation, not normal CPI. ✅ Invest in preventive care, wellness and chronic disease management. ✅ Use utilization and age data to redesign benefits sustainably. Organizations that treat employee healthcare as a strategic asset rather than an expense line will build stronger, healthier and more resilient workforces. The data is clear. The real question is whether our decisions will keep pace with it.

Healthcare costs just posted their steepest one year increase in more than a decade, excluding pandemic era fluctuations. Milliman’s 2026 Medical Index projects that average employer-sponsored healthcare costs will increase 7.9% this year from $7,838 to $8,460 per person. For Milliman’s hypothetical family of four, the total annual cost has reached $37,824. (premiums plus out of pocket expenses) But the headline is not just the size of the increase, it's where the increase is coming from. Pharmacy costs increased 14.8%, making pharmacy both the fastest growing category and the largest contributor to this year’s cost growth. Outpatient facility costs increased another 7.5%. Together, pharmacy and outpatient facility care produced 69% of the entire year-over-year increase. That should change how employers think about cost containment. Traditional network discounts or hospital negotiations may help with facility costs, but they do not solve the pharmacy problem. And outpatient costs require more than negotiated discounts. They require active site-of-care management that keeps imaging, infusions, diagnostics and appropreiate surgical procedures out of unnecessarily expensive hospital settings. A complete strategy now requires both: • A transparent, clinically managed pharmacy program • Direct contracting, site-of-care navigation and facility price intervention Address only one side, and most of the problem remains untouched. The market is sending employers a very clear message - maintaining the status quo will be expensive. #HPHP #directcontract #TierOne #zerodeductible #amarillo