Where is inflation hitting consumers hardest? New data shows which goods and services have seen the biggest price hikes
It’s no secret that prices have increased in the last decade, especially for healthcare. As new economic policies, such as tariffs, take effect, we can expect consumer out-of-pocket costs to continue fluctuating.
GoodRx Research has tracked how inflation affects consumers across various budget categories, including prescription medications.
Key takeaways:
- New data from GoodRx Research reveals that inflation is impacting consumers across various categories, including food, rent, and medical care. While the cost of prescription medications has increased by 39% since 2014, prices have risen even more for tobacco, meat, eggs, rent, and hospital services.
- Wages have increased alongside consumer prices, but inflation for many essentials, like housing and hospital services, continues to outpace earnings growth. As a result, managing health is becoming increasingly unaffordable.
- Prescription medications have experienced the highest inflation compared to other medical goods, such as nonprescription medications and medical equipment. However, prices have increased more rapidly for medical services, such as inpatient and outpatient care, nursing homes, and dental care.
The chart below illustrates the cumulative price increases across various consumer categories since 2014, highlighting how healthcare-related expenses compare to other essential goods and services.
Note that there are several different ways to measure prescription drug costs, including patients’ out-of-pocket costs, manufacturer list prices, average wholesale prices, cash prices, insurance copays, and more. For example, the Bureau of Labor Statistics calculates a consumer price index for a typical basket of prescription drugs, which has increased by 30% since 2014. By comparison, list prices set by drug manufacturers have increased by 39% since 2014.
The consumer categories hit hardest by inflation.
Consumer prices for many categories have increased substantially in the last decade. Since 2014, overall prices for all goods and services have grown by 37%.
The following consumer categories have seen price increases greater than overall inflation:
- Eggs
- Tobacco
- Rent
- Average hourly earnings
- Meats, poultry, and fish
- All food items
- Prescription drugs
While wages have risen over time, they haven’t kept pace with the prices of many goods and services. Categories such as tobacco and rent, in particular, continue to outpace earnings growth.
Prescription drug costs increased rapidly from 2014 to 2017. Since then, we’ve seen steady and regular list price increases of roughly 3% to 4% at the start of each year. As a result, prescription drug costs have risen by around 39% higher than they were in 2014.
Today, however, drug price inflation is no longer the fastest mover. Housing, food, and even wages have now overtaken the pace of prescription drug inflation. However, within the general category of medical goods, prescription medications remain among the most susceptible to inflation.
The fastest-growing prices in healthcare
Rising consumer medical prices contribute significantly to inflation, making healthcare increasingly unaffordable for many.
Several categories of healthcare prices are growing faster than overall inflation:
- Veterinary services
- Inpatient hospital services
- Outpatient hospital services
- Nursing homes
- Dental services
- Prescription drugs
Despite efforts to rein in patient costs through policies like hospital price transparency, hospital services have been hit hardest by inflation. The cost of nursing homes has also increased rapidly in the last decade. Higher prices for hospitals and nursing homes pose a significant challenge for the aging U.S. population, with the share of people 65 years old and above expected to increase by 47% over the next 25 years.
The cost of veterinary care for pets has also skyrocketed in recent years, with prices growing by 75% since 2014. Pet healthcare costs are largely unregulated, and many pet owners pay for veterinary care out of pocket.
Dental care costs have also increased rapidly in recent years, catching up to other healthcare categories, such as prescription drugs. Among medical goods, price changes for prescription drugs top the list, surpassing those for nonprescription drugs and medical supplies.
What rising prices mean for consumers
Healthcare inflation isn’t just outpacing overall inflation — it’s outpacing income. That means people’s earnings are not growing as fast as the majority of their healthcare costs, including hospital visits, prescription drugs, dental care, and nursing homes.
With healthcare costs growing faster than incomes, healthcare is becoming increasingly unaffordable for many people, even those with insurance. The number of people who are “underinsured,” which includes people with disproportionately high healthcare costs compared to their income, is likely to keep growing if things don’t change.
And with economic policies under continued debate — from tax changes to import restrictions — it’s more important than ever to track how these shifts may ripple through the healthcare system and everyday budgets.
Methodology
We compared price change data from the Bureau of Labor Statistics’ Consumer Price Index to changes in list prices measured by wholesale acquisition costs set by manufacturers.
According to the Bureau of Labor Statistics, “the Consumer Price Index (CPI) is a measure of the average change over time in the prices of consumer items — goods and services that people buy for day-to-day living.” The CPI is estimated based on a representative sample of consumer purchases across the United States, but it is not a comprehensive measure of all price changes. The CPI also includes changes in sales tax and other taxes.
Patients don’t usually pay the list price of a medication directly at the pharmacy counter. However, the list price can have lasting effects on the overall price of healthcare, influencing coinsurance and copayments, pharmacy reimbursements, and even insurance premiums in the long term. Higher list prices ultimately lead to higher out-of-pocket costs for patients.
We chose to track changes in prescription drug costs by examining medication list prices, capturing the full spectrum of medications available on the market and dispensed at community retail pharmacies. We use a nationally representative sample of prescription medications from each quarter to estimate the drug mix across all community retail pharmacies for that period. The drug mix is then used to calculate the average list price change of all drugs.
This story was produced by GoodRx and reviewed and distributed by Stacker.
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