CONSUMER PRICE INDEX – MEDICAL CARE By Kevin Suprono
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he Medical Care Index, one of the eight indexes of the Consumer Price Index (CPI), measures the change in prices paid by consumers for medical care in terms of goods and services. The two main components of the Medical Care Index are medical care services and medical care commodities. Medical care services, the larger component in terms of weight in the CPI, is divided into three subsections: professional services, hospital and related services, and health insurance. Medical care commodities, the smaller component in terms of weight in the CPI, are divided into two subsections: medicinal drugs and medical equipment and supplies. The Bureau of Labor Statistics released new CPI data for March 2021 that will be used to show the percentage change increase of health care expenditures over a one-year period (March 2020–March 2021) through the beginning of the pandemic to the present day. Upon further examination, the data will be used to analyze the changes to the specific subsections of medical care services and medical care commodities. Figure 7 depicts the unadjusted percentage change in medical expenditures of medical care commodities and medical care services. From March 2020 to March 2021, there was a –2.4 percent change in medical care commodities and a 2.7 percent increase in medical care services. March 2020, the beginning of the pandemic in the United States, began with a massive halt in activ-
Figure 7: Unadjusted Percent Change in Medical Expenditures
ity for businesses, sports leagues, and just about everything else. As a result, medical care services such as physician services and dental services increased by 5.3 and 2.6 percent, respectively. Hospitals, the main epicenters of the fight against COVID-19, saw an increase of 2.9 percent. Hospitals and physician services increased in cost over the March 2020–2021 year as their usage became dependent — over two million individuals have been hospitalized since the start of the pandemic. One of the most COVID-struck communities has been the elderly — and more specifically nursing homes and home care for the elderly. From March 2020–2021, nursing homes have seen a 3.3 percent increase, and home care for the elderly has seen a 5.9 percent increase. Cost of services have increased, as there has been a shortage of caregivers in these services for the
Figure 8: Seasonally Adjusted Percent Change in Medical Care Services
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CONNECTICUT ECONOMIC ACTIVITY REPORT • SUMMER 2021
