The journal "Health Affairs" reports that medical inflation in 2003 was 7.7%, significantly less than the prior year's 9.3% rate.

However, the bad news is that the 7.7% was significantly higher than the rate of overall inflation, and the medical trend rate for workers comp (and probably other property and casualty lines) was 12%.

This likely is a result of cost shifting. To quote the report, "Financial constraints on the Medicaid program and the expiration of supplemental funding provisions for Medicare services drove the deceleration." So, if governmental programs are paying less, some payers have to be paying more.

With the growing likelihood that Medicaid and Medicare reimbursements will continue to increase at a rate well under overall medical trend, we can expect cost shifting to continue, if not accelerate.