The problem with core inflation and endless election campaigns

November 21, 2014

Another week, another legal challenge to the Affordable Care Act.

Today House Republicans filed a lawsuit challenging two executive actions that President Obama has taken in implementing his administration’s signature healthcare legislation. After unsuccessfully voting to repeal the 2010 law over 50 times, House Speaker John Boehner finally found  an attorney willing to take the case. When combined with the Supreme Court’s decision to rule on healthcare subsidies, today’s suit maintains GOP hopes that a piecemeal approach can dismantle the law that is destroying liberty by keeping people from dying.

As this Reuters graphic shows, medical care costs have increased 21.4 percent since the beginning of 2008, a rate almost double that of the Consumer Price Index baseline for the same period. The monthly CPI report doesn’t include health insurance premiums, but instead addresses the costs of care itself, as the BLS explains. So the financial prospect of surviving a major health scare without insurance is now more than 20 percent more impossible than it was in 2008.

But while medical care inflation is nearly double the core CPI of 11.9 percent , education costs check in at nearly triple: 32.2 percent. Just over a quarter of the formula by which the education component is calculated is weighted for child care and nursery school, while a full half accounts for college tuition. Meanwhile, inflation-adjusted incomes for the bottom 90 percent of earners dropped from 2010 to 2013.

All of this adds up to a fairly untenable position for the vast majority of Americans, particularly so for young people, who continue to suffer from still-dismal, double-digit unemployment rates. Rather than grandstand for the 2016 primaries, the newly-elected Congress might instead consider practical legislation  on issues like student loans.

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