The federal government directly influences many health care prices through payments to Medicare providers and Medicare Advantage plans, as well as through its coverage of prescription drugs. Thoughtful health care reforms can reduce prices and the utilization of care, which would ease inflationary pressures. Based on the Federal Reserve study, each percentage point reduction in Medicare costs would reduce the inflation rate by 5 to 15 basis points. Medicare both directly and indirectly affects aggregate health-care inflation and overall health care cost inflation.