Health Care Percentage Of GDP Hits Record; Price Rise Modest

ANN ARBOR — The monthly Health Sector Economic Indicators report from Ann Arbor’s Altarum Institute shows national health spending grew by 5.7 percent in January 2015 compared with January 2014, suggesting that the strong growth in the latter half of 2014 is carrying forward into the new year.

Spending on prescription drugs continued its double-digit growth at
11.6 percent.

Growth for all of 2014 is now estimated at 5 percent, with a pattern of acceleration over the year. The health-spending share of gross
domestic product was 17.9 percent in December, up from 16 percent at the start of the recession in December 2007. This represents an all-time high share of the economy devoted to the health sector.

Health care prices in January 2015 were 1.2 percent higher than in
January 2014, down from the December year-over-year change of
1.8 percent. Year-over-year hospital prices fell 0.1 percent in January, far below the December gain of 0.9 percent and the only recorded fall in prices since Altarum began collecting national data in 1992.

Physician and clinical services prices were flat, after rising 0.6
percent in December. Prescription drug prices rose 5.6 percent,
down slightly from the December figure of 6.4 percent but well above the 4 percent growth of the previous months.

The health sector added 23,800 new jobs in February 2015, below
the average growth seen in the fourth quarter of 2014 (39,000) and
the January 2015 level (40,000).

Job growth remained solid in hospitals (8,700 jobs) and offices of
physicians (7,300), but there were moderate losses in nursing and
residential care (down 4,800). The health share of total employment
remained at 10.58 percent, below the all-time high of 10.66 percen
last seen in December 2012. With the 2014 acceleration, health job
growth has now caught up to nonhealth growth at 2.4 percent year-
over-year.

Read the full report at www.altarum.org/HealthIndicators.

“The Quarterly Services Survey released on March 11 shows a
steady acceleration in spending on health care services across the
four quarters of 2014,” said Charles Roehrig, director of Altarum’s
Center for Sustainable Health Spending. “This mirrors the
acceleration in health care services employment seen in 2014. Our
March 25 Health Sector Trends Report will explicitly incorporate the new QSS data to provide a complete picture of health spending for 2014.”

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

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