The National Council on Compensation Insurance said that after several years of ignoring broader economic patterns, medical inflation in the third quarter followed the softening trend in overall inflation.
The softening in medical inflation spread across multiple subcomponents, including physical care, hospital care, medical equipment and prescription drugs, according to NCCI’s Medical Inflation Insights for October.
NCCI compiles the medical cost components from the Producer Price Index and Consumer Price Index and reweighs them to more accurately reflect the mix of spending in work comp for its own “Workers Compensation Weighted Medical Price Index.”
“After growing near 3.5% to begin 2024, the (Workers Compensation Weighted Medical Price Index) has moderated throughout the year and spent most of the third quarter growing near 2.5%,” NCCI said. “This pace of price inflation is consistent with what was experienced through most of 2022 and 2023, indicating little change in the long-term trajectory of price growth based on these indicators.”
Inflation in physician care has been steady through most of the year, at about 1.6% since March.
Hospital price growth has been more volatile, with outpatient care ranging from a low of 3% in July to a high of 4.8% in March. In the third quarter, inflation ranged from 3% to 3.8%.
Hospital inpatient inflation increased to 5.5% in August from 5% in July, then fell to 4.5% in September. From March to June, the inpatient inflation rate ranged from 4.5% to 4.8%.
NCCI said hospital inpatient price growth is consistently higher than other categories, but its smaller weight in work comp helps offset the high rate.
Durable medical equipment, drugs and other service categories experienced moderating price growth throughout the third quarter.
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Based in New York, Stephen Freeman is a Senior Editor at Trending Insurance News. Previously he has worked for Forbes and The Huffington Post. Steven is a graduate of Risk Management at the University of New York.