(WXYZ) — Inflation is up across metro Detroit, and the rising prices are eating away at our buying power, meaning we'll have to worker harder and longer just to stay even.
This time, we're focusing on healthcare and inflation's impact on medical and drug prices. In some way, it's a bright spot – for now. But experts say in the next year or so, the bill on healthcare inflation will be due, and the signs are already starting to appear.
At SRX Specialty Pharmacy, Owner Aman Singh sees the impact of supply chain problems and higher prices when it’s time to buy supplies.
Paper for labels, caps and vials are, at times, hard to find and always costing more.
"Not having something this small can really disrupt healthcare," he said. "That's a cost that's built-in. But if it increases by two or three-fold, well, now your costs go up."
Those aren't the only costs Singh sees rising. Prescription drug costs are also climbing.
According to prescription tracking website GoodRx.com, prescription prices are up just 2.5% during the pandemic, but prices on 810 different medicines rose by 5% in January.
"Reimbursements are already set by insurance companies. And if they don't match that inflationary cost, we have to take the loss," he said.
Michael Greiner, an assistant professor of management at Oakland University, said there isn't much control over the cost of prescription drugs.
"They are more elastic than some of the other healthcare costs out there," Greiner said.
He says other than drug prices, healthcare isn’t feeling the same pain as other sectors. According to the Bureau of Labor Statistics, while overall inflation is running at 7%, medical costs are up just 2.2%, hospital services at 3.5%, and physicians’ services up 4.3%.
So where is the price pressure in healthcare?
"The interesting thing about health care is it's kind of what we would call a lagging indicator," he said.
Greiner says healthcare prices can’t move the way gas or food prices do because, like Singh, most hospitals and other healthcare providers lock in prices with the government and insurance providers for a year or more in advance.
"So as a result of that, the hospitals really aren't in a position to be able to adjust what they're charging, even if they are dealing with higher costs on their end," he said.
They are dealing with higher costs, including higher salaries to attract doctors and nurses and fewer elective procedures during the pandemic, cutting a major source of revenue. A squeeze for all aspects of healthcare.
"Part of that is going to eventually just eat into their bottom line," Thomas Wilk, a lecturer in economics at Eastern Michigan University, said.
When those contracts between healthcare providers and the federal government and insurance companies come up for renewal, we could see big price hikes.
"So we might see some inflation start to pick up, but it might take another year or two," he said.
"That's when you're going to start to see increases in the cost of health care. It will be reflected, of course, in the higher premiums that people will be paying for their insurance," Greiner said.
Singh sees that side of it too. He runs a small business and pays healthcare premiums for his employees.
Singh says vials were in short supply during the pandemic, and so were the caps. When Singh found the vials at a decent price, no one had caps.
It's a real challenge for a small business trying to stay afloat in the pandemic and keep prices low to stay competitive.
Medicare rates for 2023 will be released this spring, but an advanced notice is forecasting an increase of 4 3/4%.