TEA.16.1

Description

Economic damages experts regularly have the difficult task of forecasting health care price inflation, especially involving how much the cost of life care plans will grow over time in an unpredictable future.  This paper examines the strengths and weaknesses of two commonly used methods of forecasting the price of medical goods and services:  One is to use directly the 10-year price projections from the Office of the Actuary of the Centers for Medicare & Medicaid Services (CMS); the other is to forecast future price increases based on historical data for health care goods and services embedded within  the Consumer Price Index (CPI) published by the Bureau of Labor Statistics (BLS).  In this article, CMS and BLS health care price indexes are mapped to one another, definitional differences are examined, direct out-of-pocket spending is segregated from insurance-related spending, and the historical price growth rates for similar expenditure types are compared and analyzed.