In recent days, financial markets have become more concerned about the potential for a faster-than-expected increase in prices throughout the economy. A report showing strong wage gains by U.S. workers last month helped briefly push stocks into a correction, a retreat of more than 10 percent from their recent peak.

Rising prescription-drug prices have made headlines, but drugs account for only 10 percent of total health spending in the U.S. The bulk of outlays goes to hospitals, doctors, and other professional services. Price increases in those sectors have been restrained, partly because of limits on how much Medicare pays hospitals and physicians under the Affordable Care Act and other legislation.

Price hikes slow

Until the Great Recession, medical prices usually outpaced inflation

Slow growth in health-care prices has been dragging down the core price index for personal consumption expenditures, the Federal Reserve’s preferred measure of inflation, economists at the Federal Reserve Bank of San Francisco estimated in November. If health inflation matched its pace in the mid-2000s, it would add 0.3 percentage points to the current rate of inflation.

Though health-care inflation is expected to accelerate, “it appears unlikely to return to its prerecession level,” which could moderate overall inflation, the Fed economists wrote. Some of the changes that held down Medicare payments are permanent, and commercial insurers often base their reimbursement rates on Medicare, said Adam Shapiro, a research adviser at the San Francisco Fed.

Like the government, employers have tried to hold down their health costs. They’ve shifted more of the burden onto workers through higher deductibles and cost-sharing. Both the U.S. government and private health plans are experimenting with paying providers based on how well they take care of patients, rather than the volume of services they provide.

At the same time, hospitals and doctors groups are increasingly combining their businesses, giving them greater power to command higher prices.

Prices are just one determinant of overall health-care spending, along with the amount and intensity of care. Health spending accounts for roughly 18 percent of overall U.S. economic activity, the highest in the developed world.

“We’re already devoting too much of our overall economic product to the health sector and not getting a great value for it,” Hughes-Cromwick, the Altarum official, said. Any increase in medical prices will further strain the budgets of governments, employers, and households that pay for it, he said.

Copyright 2018 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.