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How much do Medicare cuts reduce inflation?
FRBSF Economic Letter (2014)
  • Jeffrey Clemens, University of California, San Diego
  • Joshua D Gottlieb, University of British Columbia
  • Adam H Shapiro, Federal Reserve Bank of San Francisco
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.
  • inflation,
  • Medicare
Publication Date
September 22, 2014
Citation Information
Jeffrey Clemens, Joshua D Gottlieb and Adam H Shapiro. "How much do Medicare cuts reduce inflation?" FRBSF Economic Letter Vol. 2014 Iss. 28 (2014)
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