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How much do Medicare cuts reduce inflation?

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Abstract

Because the health sector makes up a large share of the U.S. economy, widespread price changes for medical services can impact overall inflation significantly. Cuts to public health-care spending spill over directly and indirectly to private spending. A recent estimate suggests the full effect of the Medicare payment cuts from the 2011 Budget Control Act resulted in a decline of 0.24 percentage point in the overall personal consumption expenditures price index. This is over twice the expected drop if private-sector spillovers are not included.

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  • Jeffrey Clemens & Joshua D. Gottlieb & Adam Hale Shapiro, 2014. "How much do Medicare cuts reduce inflation?," FRBSF Economic Letter, Federal Reserve Bank of San Francisco.
    • Handle: RePEc:fip:fedfel:00030
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    1. Jeffrey Clemens & Joshua D. Gottlieb, 2017. "In the Shadow of a Giant: Medicare’s Influence on Private Physician Payments," Journal of Political Economy, University of Chicago Press, vol. 125(1), pages 1-39.
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    Cited by:

    1. Adam Hale Shapiro, "undated". "Decomposing Supply and Demand Driven Inflation," RBA Annual Conference Papers acp2023-03, Reserve Bank of Australia, revised Nov 2023.
    2. Jeffrey Clemens & Joshua D. Gottlieb & Adam Hale Shapiro, 2016. "Medicare payment cuts continue to restrain inflation," FRBSF Economic Letter, Federal Reserve Bank of San Francisco.
    3. Dunn, Abe & Shapiro, Adam Hale, 2015. "Physician payments under health care reform," Journal of Health Economics, Elsevier, vol. 39(C), pages 89-105.
    4. Jeffrey Clemens & Joshua D. Gottlieb & Tímea Laura Molnár, 2015. "The Anatomy of Physician Payments: Contracting Subject to Complexity," NBER Working Papers 21642, National Bureau of Economic Research, Inc.
    5. Jeffrey Clemens & Joshua D. Gottlieb, 2017. "In the Shadow of a Giant: Medicare’s Influence on Private Physician Payments," Journal of Political Economy, University of Chicago Press, vol. 125(1), pages 1-39.
    6. Abe Dunn & Adam Hale Shapiro, 2018. "Physician Competition and the Provision of Care: Evidence from Heart Attacks," American Journal of Health Economics, MIT Press, vol. 4(2), pages 226-261, Spring.
    7. Tim Mahedy & Adam Hale Shapiro, 2017. "What's Down with Inflation?," FRBSF Economic Letter, Federal Reserve Bank of San Francisco.
    8. Adam Hale Shapiro, 2015. "Did Massachusetts health-care reform affect prices?," FRBSF Economic Letter, Federal Reserve Bank of San Francisco.
    9. John C. Williams, 2014. "Navigating toward normal: the future for policy," FRBSF Economic Letter, Federal Reserve Bank of San Francisco.
    10. Adam Hale Shapiro, 2022. "Decomposing Supply and Demand Driven Inflation," Working Paper Series 2022-18, Federal Reserve Bank of San Francisco.
    11. Adam Hale Shapiro, 2018. "Has Inflation Sustainably Reached Target?," FRBSF Economic Letter, Federal Reserve Bank of San Francisco.

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