During my recent vacation, there were multiple occasions where consumers expressed anger to me about prices they had paid or had refused to pay. The cases were all good illustrations of how people sometimes think about prices, and how they behave when making buying decisions. In my view, their actions were not always rational, and their anger had little to no effect. If the consumers really want lower prices, they need to change their buying behaviors.
According to the Federal Reserve Bank of St. Louis, during the past 20 years the inflation rate for medical care has been 70% higher than headline CPI. (I would have guessed the difference is even greater.) There are several reasons healthcare costs exceed the general inflation rate, and I can’t cover all of them in one post, but I will address a few of them. One common theme is all the factors increase the pricing power of the medical provider.