Health Care Prices, Employment Up: Spending Flat

ANN ARBOR — The Altarum Institute’s monthly checkup on America’s health care spending finds prices up, particularly for hospitals and medicine, but not the expected increase in care utilization that was expected from millions more Americans with health insurance under the Affordable Care Act.

The monthly Health Sector Economic Indicators, released by Algarum’s Center for Sustainable Health Spending, found health care prices in May 1.8 percent higher than in May 2013, well above the 12-month moving average of 1.3 percent. Hospital prices grew 2.1 percent, while prescription drug prices rose 3.6 percent. Physician and clinical services prices, which exhibited near-zero growth in the first quarter of 2014, grew by 0.6 percent.

Health care gained 21,000 jobs in June 2014. Over the first half of 2014, the health sector grew by more than 20,000 jobs per month, about 20 percent higher than in the first half of 2013. Growth in the second quarter was particularly strong: 25,000 jobs per month versus 15,000 in the first quarter. The health share of total employment fell slightly to 10.61 percent, down from the all-time high of 10.66 percent last seen in December 2012.

Health spending in May grew 4.8 percent over May 2013, the same figure estimated for growth in the first quarter of 2014, compared to the first quarter of 2013. This represents a significant downward revision to earlier estimates. Spending in May, year over year, increased in all major categories, with prescription drugs growing the fastest at 12.2 percent.

“The rise in health care prices and employment during the second quarter suggests that spending will rebound from the unexpectedly slow first quarter rate,” said center director Charles Roehrig. “However, we are still not detecting signs of the increases in utilization expected from expanded coverage under the Affordable Care Act and suspect the effect may be more incremental and gradual than first expected.”

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Altarum offers research and consulting to the health care industry. It has offices in Ann Arbor, the Washington, D.C., area; Portland, Maine; and San Antonio, Texas. It employs about 400 people.

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