DETERMINANTS OF THE INFLATION RATE OF THE HEALTH-CARE CPI IN THE US

A key issue in health care reform in the United States is the need to contain the inflation rate of the consumer price index (CPI) for healt h care services (IRCPIHC). Although previous literature has provided a variety of arguments regarding the causes of the rising IRCPIHC, rela tively little has been done of a formal empirical nature to test these various arguments. We estimate a reduced-form equation for the US tha t indicates the IRCPIHC is an increasing function of general inflation , the population percentage over age 65, real malpractice insurance pr emiums, the population percentage covered by Medicare, increased usage of technological innovations in medicine, and real GDP growth and a d ecreasing function of the number of physicians per 100 000 population.