In the Medicare model that I built last month, I made an assumption that healthcare inflation will subside over the next eight years and help bring medicare spending as percent of gdp in line with what it is today.
Over the last week I talked to several people in the healthcare industry that provide anecdotal evidence for both.
Deflationary: A prominent researcher who is working on the materials for bone regeneration says that having such materials will enable a person to get up and walk after the surgery and that future is not far away. This is very deflationary as there will less need for hospital stays and post surgery care.
Inflationary: Someone who works in finance for a medium size medical conglomerate says that everyone in the system from doctors to oncology drug administrators have the incentive to increase prices as they get paid based on a percentage of the total revenue. Pharmaceutical sales people high five the people that sell to when there the price increases as everyone makes more money. Someone has to pay though.
If you want to read some interesting discussion of the model, click here.
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