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How much do Medicare cuts reduce inflation?

Author

Listed:
  • Clemens, Jeffrey

    (University of California, San Diego)

  • Gottlieb, Joshua D.

    (University of British Columbia)

  • Shapiro, Adam Hale

    () (Federal Reserve Bank of San Francisco)

Abstract

Because the health sector makes up a large share of the U.S. economy, widespread price changes for medical services can impact overall inflation significantly. Cuts to public health-care spending spill over directly and indirectly to private spending. A recent estimate suggests the full effect of the Medicare payment cuts from the 2011 Budget Control Act resulted in a decline of 0.24 percentage point in the overall personal consumption expenditures price index. This is over twice the expected drop if private-sector spillovers are not included.

Suggested Citation

  • Clemens, Jeffrey & Gottlieb, Joshua D. & Shapiro, Adam Hale, 2014. "How much do Medicare cuts reduce inflation?," FRBSF Economic Letter, Federal Reserve Bank of San Francisco.
  • Handle: RePEc:fip:fedfel:00030
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    File URL: http://www.frbsf.org/economic-research/publications/economic-letter/2014/september/medicare-cuts-reduce-inflation-budget-control-act/el2014-28.pdf
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    References listed on IDEAS

    as
    1. Jeffrey Clemens & Joshua D. Gottlieb, 2017. "In the Shadow of a Giant: Medicare’s Influence on Private Physician Payments," Journal of Political Economy, University of Chicago Press, vol. 125(1), pages 1-39.
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    Cited by:

    1. Clemens, Jeffrey & Gottlieb, Joshua D. & Shapiro, Adam Hale, 2016. "Medicare payment cuts continue to restrain inflation," FRBSF Economic Letter, Federal Reserve Bank of San Francisco.
    2. Dunn, Abe & Shapiro, Adam Hale, 2015. "Physician payments under health care reform," Journal of Health Economics, Elsevier, vol. 39(C), pages 89-105.
    3. Jeffrey Clemens & Joshua D. Gottlieb & Tímea Laura Molnár, 2015. "The Anatomy of Physician Payments: Contracting Subject to Complexity," NBER Working Papers 21642, National Bureau of Economic Research, Inc.
    4. Jeffrey Clemens & Joshua D. Gottlieb, 2017. "In the Shadow of a Giant: Medicare’s Influence on Private Physician Payments," Journal of Political Economy, University of Chicago Press, vol. 125(1), pages 1-39.
    5. Abe Dunn & Adam Hale Shapiro, 2018. "Physician Competition and the Provision of Care: Evidence from Heart Attacks," American Journal of Health Economics, MIT Press, vol. 4(2), pages 226-261, Spring.
    6. repec:fip:fedfel:00150 is not listed on IDEAS
    7. Shapiro, Adam Hale, 2015. "Did Massachusetts health-care reform affect prices?," FRBSF Economic Letter, Federal Reserve Bank of San Francisco.
    8. Williams, John C., 2014. "Navigating toward normal: the future for policy," FRBSF Economic Letter, Federal Reserve Bank of San Francisco.

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