The Spark

Major inflection point looms for US health-care costs

The Spark: Major inflection point looming

What do two divergent inflation readings have to do with a blockbuster health-care deal?

Quite a lot, actually.

For starters, there is the potential $32 billion-plus deal for health insurance giant Humana, the bulk of whose earnings come from Medicare, the federal program that insures America's elderly.

Then, there is the gap between the two leading U.S. core inflation readings, which recently hit a six-year high.

The Federal Reserve's preferred gauge was up just 1.2 percent in April from a year earlier—just off its historical lows. Meantime, the more widely followed core consumer price index jumped 1.8 percent during the period.

A key reason for this gap is the price of medical care—and Medicare payments are a big chunk of that.