A Medical Device Daily

If potential solutions are not acted upon now to curtail medical cost inflation, the pressures exerted on American households by increasing food, fuel and fading home equity values will appear small by comparison.

That's the conclusion of a report compiled by Bernard Pettingill Jr, PhD, a consulting economist based in Palm Beach Gardens, Florida, who terms the problem "medflation."

Pettingill said that one of the usual suspects identified as the source of healthcare cost inflation – the growing nursing shortage — is indeed at the root of many healthcare cost problems.

"We are 300,000 short [of nurses] now and it's going to get worse," he told Medical Device Daily. "Right now it's not critical, but when the Baby Boomers get to be 70 and 80, a crisis is going to occur."

Pettingill said he is selling his 9-page report, and related data to back his theories, to the highest bidder.

But a few preliminary highlights from the study follow:

• Medical service costs are increasing faster than the overall inflation rate, which is measured by the Consumer Price Index (CPI). Medflation is up 77% from 1992-2005, while the CPI is up only 39%, according to Pettingill's report.

More specifically, the costs for medical services rose nearly twice as fast as the CPI. Managed care slowed this trend during the 90s, but consumers of health are now faced with expenditures accelerating faster than the CPI.

• The U.S. Bureau of Labor Statistics and Occupational Employment Statistics reported that medical/healthcare inflation has increased, on average by 5% per year over the past nine years, Pettingill reports.

• The Board of Trustees of the Federal Old-Age and Survivors Insurance and Disability Insurance Trust Fund reported that over the last 20 years, the medical index increased by nearly 6%.

Finally, based on BLS-OES data, nursing costs have increased at an annual rate of 4.48% to 4.75%.

• Pettingill noted that Blue Cross and Blue Shield report that medflation has exhibited nearly double-digit increases in some categories, with numerous studies commissioned to determine the causes and consequences of these escalating costs.

• Salary cost pressures will continue to increase as the shortage of nurses grow, according to the report. Compounding these pressures are the 47 million Americans without healthcare, the 73 million Americans who are "under-insured" and the prospect of nationalized health insurance for all Americans.

In 2001, nearly $100 billion was spent on healthcare for the uninsured and with national insurance coverage, the demand for nurses will skyrocket.