How much do Medicare cuts reduce inflation?FRBSF Economic Letter (2014)
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.
Publication DateSeptember 22, 2014
Citation InformationJeffrey Clemens, Joshua D Gottlieb and Adam H Shapiro. "How much do Medicare cuts reduce inflation?" FRBSF Economic Letter Vol. 2014 Iss. 28 (2014)
Available at: http://works.bepress.com/joshua_gottlieb/11/