The price of inpatient hospital services has increased faster than all other medical goods and services since 2014 — just edging out prescription drug price increases.
Prescription medication prices have increased 35% since 2014 and 1.8% since the start of the pandemic.
Medical equipment and nonprescription drugs, also known as over-the-counter medications, are the only health goods or services that have seen a decrease in price since 2014.
The COVID-19 pandemic has exposed many inequities and inefficiencies in our healthcare system. So GoodRx Research decided to analyze the costs of all medical goods and services since 2014 to find out whether some areas of healthcare have become more expensive than others during the pandemic.
The majority of health goods and services have seen significant price increases since 2014. Only medical equipment and nonprescription drugs have gone down in price. All medical goods have increased by 15%, and services have increased by 28% since 2014.
These steady increases are no longer a surprise. But unlike past years, prescription medications are no longer increasing in price faster than any other medical good or service. Prescription drugs have increased 35% since 2014, while inpatient hospital costs are up 37%. Since the pandemic began, prescription drugs prices have increased 1.8%, and inpatient hospital costs have shot up 5.8%.
The graph below compares the price changes in all medical goods and services to the price changes in prescription medications since 2014.
In the analysis, our Research Team compared data from the Bureau of Labor Statistics’ Consumer Price Index (CPI) to the GoodRx List Price Index. The CPI measures the change over time in prices for goods and services that people purchase. And the GoodRx List Price Index measures drug list price changes. Both datasets track monthly medication price changes. But the drug list price index data is based off of official list prices set by manufacturers, while the CPI data comes from surveys of consumers and establishments.
So how do prescription drug prices compare to healthcare prices from the Bureau of Labor Statistics (BLS)?
The BLS has its own measure of prescription drug prices. And while its index also reveals rising prices for medications, the trend isn’t as steep as the GoodRx List Price Index.
The BLS shows that prescription drug prices have increased by 20% since 2014, while the GoodRx List Price Index shows that drug prices have increased by 35%.
Why the difference? The two indexes are looking at different measures of medication prices. The GoodRx prescription drug index tracks drug list prices, which are the official prices set by drug manufacturers. The BLS prescription drug price index reflects a mix of cash prices (the price a consumer pays without insurance or a discount) and insurance prices.
Patients typically pay the cash or insurance price at the pharmacy, and not the list price of a medication. However, the list price can have lasting effects on the price of a drug and healthcare overall. In essence, higher list prices lead to higher out-of-pocket costs for patients.
Even though the indexes measure different prescription drug prices, one thing is clear: Patients are paying more for their medications than they were in 2014 no matter how you look at it.
Since 2014, prescription drug prices, inpatient hospital costs, and outpatient hospital costs have all risen over 30%. But inpatient hospital services have increased the most — 37% since 2014 and 4.1% in 2021 alone.
It’s not a shock that the prices of these three medical services are going up more than others. A lack of transparency in these areas often leads to rising prices and stifles competition in the market, which is essential to driving costs down.
Like prescription medication prices, prices for inpatient and outpatient hospital services aren’t clear until after you receive them. Patients at both the pharmacy counter and in the hospital rarely know the cost of their medication or procedure until after the fact. Plus, more than half of U.S consumers report receiving an unexpectedly large bill. These out-of-network surprise bills even happen to those with insurance.
Mysterious hospital and prescription drug pricing have long outraged patients and have spurred regulation to improve transparency. However, the laws don’t always lead to major changes.
For instance, an act banning medical surprise bills went into effect this January, and last year new regulations from the Centers for Medicare & Medicaid Services began requiring hospitals to publicly post prices. But hospital price transparency still has a long way to go. Patients struggle to understand the full price of a procedure, and not all hospitals are following CMS guidelines.
Nursing homes have increased in price more than any medical good or service since the start of the pandemic, by 6.3%. This could be a result of the ongoing healthcare provider shortage due to burnout, pandemic protocols, and other COVID-related factors
Like many services in this analysis, nursing home care is already expensive, and only continues to rise in price. Since 2014, the cost of nursing home care has increased by 30%. This is a steep increase, but still less than the dramatic increase in drug prices.
Who is affected most by these rising prices? In the near term, it’s those without insurance and those who currently require long-term care. But a large chunk of the U.S. population will eventually be exposed to these rising prices. In fact, a recent analysis noted that three-quarters of Americans above the age of 65 will need nursing home care at some point.
While some services are seeing out-of-control price increases, dental services, physicians’ services, eye care, medical equipment, and nonprescription drugs are rising at a rate that is slower than average hourly earnings — and much slower than drug prices. Nursing home costs are also rising slower than hourly wages, but by less than 1%.
Since 2014, the price of dental services has increased by 21.5%, making it a sector of healthcare that is notoriously unaffordable. In fact, cost is the biggest barrier Americans face in getting dental care.
Physicians’ services include any service that is performed and billed by a private practice MD or a DO, and can include home visits or visits in an office or hospital. Since 2014, these services have increased in price by 14.5%.
Physicians’ services also saw a spike in price during the pandemic. On average, these services increased in price 1.3% year over year pre-pandemic. But in the first year of the pandemic, these services increased 5.3%. Similar to nursing homes, this increase in price could also be related to the shortage of healthcare professionals.
Nonprescription drugs, also referred to as over-the-counter (OTC) medications, are one of the only medical services that has seen a drop in price since 2014. But they have only dropped by a little more than 2%. Much of this is likely due to competition and transparency in the market. Multiple versions of OTC medications on the market, coupled with the ability for patients to price-compare in the drug aisle, have likely led to a small decline in prices.
Medical equipment has also seen a dip in price, though it dropped by less than 1%.
Prescription medication prices, inpatient hospital costs, and outpatient hospital costs have all increased dramatically since 2014. Prescription drug prices are no longer increasing at the fastest rate compared to other medical goods and services. However, they aren’t far behind inpatient hospital costs, which rose 4.1% in 2021 alone.
Drug prices have increased 1.8% since the start of the pandemic, and many Americans still struggle to afford their medications. In fact, close to 40% of Americans have trouble affording their medication and are forced to forgo treatment, borrow money, or skip out on food or housing.
Even if patients are shielded from dramatic swings in price through insurance, high drug prices drive up overall healthcare spending. The prices can trickle down to consumers through higher insurance premiums, copays, and coinsurance.
There are no major drug price decreases in sight, so it is important to become an educated consumer and shop around for the best price for you.
Bureau of Labor and Statistics. (2022). Consumer Price Index.
Centers for Medicare & Medicaid Services. (2021). Hospital price transparency.
Centers for Medicare & Medicaid Services. (2022). No Surprises Act.
Gupta, N., et al. (2019). Main barriers to getting needed dental care all relate to affordability. Health Policy Institute.
Huang, S.S., et al. (2019). The determinants and variation of nursing home private-pay prices: Organizational and market structure. Medical Care Research and Review.