On the Subject of Inflation, Need a Little Off-Topic Assistance

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Lemonyellowschwin's picture
Lemonyellowschwin
Status: Platinum Member (Offline)
Joined: Apr 22 2008
Posts: 547
On the Subject of Inflation, Need a Little Off-Topic Assistance

Hi all,

This is timely, but somewhat off-topic.  I need some help cross-examining an expert witness in a case I have that is currently in trial.

I am lawyer representing a seriously-injured individual with many future needs.  I've had an expert calculate that her future medical needs are likely to cost in the range of $2.5 million for her life (in today's dollars).  My expert has not reduced this figure to present value, reasoning that whatever return she could get on a trial verdict is not likely to exceed the inflation rate on the medical services she'll need in the future.

The other side has an expert who purports to make a substantial reduction in this $2.5 million figure based on a present-value calculation that reduces the amount of her requirements according to the return she could earn on a three-year T-bond.  But he has not figured the other side of the equation:  Namely, that the cost of her medical care is also likely to rise over time with inflation. 

I want to show this expert that the return that my client could get on a three-year T-bond is not likely to offset the current inflation rate for medical services; in fact I think the current inflation rate is HIGHER than the rate of return she could get on a three-year T-bond.

Can someone tell me what the best source of information is on the current rate of inflation for medical services?  I am in the Seattle area, so anything specific would be great although I would also take an nationwide statistics.

Thanks.

Jager06's picture
Jager06
Status: Gold Member (Offline)
Joined: Dec 2 2009
Posts: 395
Re: On the Subject of Inflation, Need a Little Off-Topic ...

THe BLS track medical CPI, but I would want to call and make sure they are not using Hedonics or any other accounting tricks to hold it artificially low.

http://www.bls.gov/cpi/cpifact4.htm

Next call an insurance company and try to get their historical actuarial data for procedures your client will need and any projections they are willing to share.

See if you can overlay the data points with a recognizable inflation indicator, like the CCI that Chris has shown in the latest update. You may be able to prove an increasing rate of inflation in medical costs with future projections based on the CCI new highs, and perhaps get a settlement tied to an inflation statistic other than the obviously false CPI espoused by the Fed.

Best of luck,

Jager06

 

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