The Cost Of These 3 Medical Expenses Are Rising Faster Than Inflation

According to U.S. Centers for Medicare and Medicaid Services (CMS), as of 2023, the amount of money the average American spends on healthcare was $14,570 per person. That figure alone could be shocking enough to warrant a doctor's visit. But when you realize that per capita health spending is rising way faster than the general rate of inflation, you may understand part of the reason why the country shelled out $4.9 trillion on healthcare in the same year. The usual causes for a hike in prices, such as an increasing ageing population, labor shortages, rising rates of chronic illnesses, and a fragmented pay structure are frailties that afflict several other nations. But the United States stands out for spending $8,353 per person on inpatient and outpatient care, as opposed to an average $3,636 spent per person in other similar nations, per KFF. At this rate of expenditure, a lot of boomers won't even be able to afford essential care services in the upcoming years.

The average prices for procedures like laparoscopic appendectomy and full knee replacements, along with general outpatient office visits, have particularly surged in the last couple of decades and outpaced inflation. While the prices for public insurance programs like Medicaid and Medicare have not risen as fast, private insurance parties and enrollees have had to bear phenomenal hikes to compensate losses for healthcare providers. In fact, there is a huge mismatch between hospital medical prices and the actual utilization of services, which is lower in the U.S. compared to other nations. When it comes to these medical services, there are significant cost variations across states as well, which further reveal holes in the healthcare payment systems.

Laparoscopic appendectomy is the surgical removal of an inflamed appendix. The procedure utilizes advanced tech to make incisions in the abdomen and a laparoscope (camera) to visualize the inner parts during the procedure. This method of surgery results in faster recovery times and less pain for the patients. According to a 2020 report from Peterson-KFF Health System Tracker, the price of laparoscopic appendectomy was already increasing at a rapid rate back in the 2010s. By 2018, the average price of this procedure for the privately insured inpatients was $23,385. Extrapolating this figure based on basic CPI inflation rates lands us with a price tag of somewhere around $30,000 in 2025. But if you consider the fact that inflation rates for medical costs have been generally higher than overall inflation — they increased 3.3% in 2024 compared to 3% overall inflation, per Peterson-KFF — you would probably get to an even higher figure.  

In fact, the entire laparoscopic appendectomy market, which was valued at $2.54 billion in 2024, is expected to grow at a compound annual growth rate (CAGR) of 5% and reach $3.41 billion by 2030, per Grand View Research. With more than 300,000 annual visits to hospitals for appendicitis procedures, the rise in prices reflects an increase in demand for the service. Advancement in surgical techniques has been another major driver of the trend. Technologies like high-definition cameras and robotics used in the procedure have evolved significantly and improved patient outcomes. Furthermore, technological improvements to minimally invasive instruments employed in the procedure have also contributed to the hike in prices for the service. However, the industry also suffers from wide variations in costs across regions and a lack of transparency in pricing. 

Knee replacement is the surgical procedure of resurfacing damaged bones of the knee joint with metal or plastic implants. A full knee replacement involves replacing the surface of all three bone compartments in the joint. This surgery is primarily used for patients with severe arthritis. Back in 2016, the surgery cost $34,063 to the privately insured (large employer plans), per Peterson-KFF, which amounts to more than $45,000 in 2025 when adjusted for inflation. However, the CPI-U for medical services has risen by 54.5% from 2009 to 2024, which indicates a higher increase in costs for services like knee replacements when compared to all goods and services. 

The general demand for the procedure, increasing implant costs, and investments in computer-assisted procedures and robotics have given full knee replacement prices a huge surge in the recent years. Around 790,000 people undergo a full knee replacement every year. In fact, this number is only growing, owing to the ageing population, more active lifestyles, as well as the success of these surgeries in improving patients' quality of life.

But there is also a huge discrepancy between the price of the procedure and its costs. A lack of transparency from healthcare providers and a net loss when serving Medicare patients has resulted in institutions negotiating higher prices with private insurers. In fact, when Gundersen Health System's hospital decided to get to the bottom of what a knee replacement surgery actually costs, it came up with a way smaller figure than the actual price, per Wall Street Journal (via Better Solutions for Healthcare). 

Millions of people across the country receive outpatient treatments for a range of services that are categorized on the basis of severity and complexity of the procedures involved. In fact, there is a growing trend away from inpatient visits towards outpatient treatments. This is why the rise in average outpatient office visit prices over the years is all the more concerning. The cost of performing these services in a hospital setting is far greater than at physician sites or ambulatory centers. This is also evident in the 6.9% increase in hospital prices and the 6% increase for nursing home prices from June 2023 to June 2024, which is way higher than the 3% hike in general inflation during the same time, as well as the jump in the prices of essential household items in 2025. 

An increase in labor costs and supply chain issues ever since the pandemic hit has significantly boosted hospital expenses, which grew by 5.1% in 2024. The fact that more and more doctor settings are being bought by hospitals is also contributing to the rise in outpatient prices. Once a hospital buys such a site, it can charge higher rates — based on hospital billing codes — for the same services. However, a major cause of the surge in outpatient visit prices is the increase in the level of complexity of the treatments received by the patient over the years, per Peterson-KFF. Since the prices charged by providers are linked to the complexity, the trend has raised the question of whether the change is due to an actual shift in cases or inappropriate billing ("upcoding").