Ann Arbor Firm Finds Health Spending Rising, But Health Care Prices Flat

ANN ARBOR — The health care research firm Altarum Institute announced Friday that national health spending in April was up 6.2 percent from April 2014 — and, at $3.2 trillion, health now represents 18.2 percent of gross domestic product, a new all-time high.

Altarum said the health care industry is seeing increased utilization and less uncompensated care. Inflation is not driving the spending increase — since health care prices in April were only 1.2 percent higher than a year earlier. That’s close to the decade-plus low of 1 percent price growth registered in August 2013.

Spending rose in all major categories. Prescription drug spending grew the fastest, by 10.5 percent, but is showing signs of moderation. Hospital spending grew at a rapid 8.5 percent, presumably driven by increased utilization and less uncompensated care, as prices have been stagnant.

Hospital prices rose only 0.5 percent year over year, while physician and clinical services prices plunged 1.1 percent, reflecting the end of enhanced Medicaid primary care payments. Prescription drug prices rose 5.6 percent, down from March but still near the 13-year high of 6.4 percent reached in December 2014.

The health sector added 46,800 new jobs in May, well above the 12- and 24-month average gains of about 34,000 and 24,000, respectively. Health care has added more than 400,000 jobs in the past 12 months, growth not seen since 1991.

Hospitals are averaging nearly 13,000 new jobs per month so far in 2015, after little growth in 2013 and early 2014. The health share of total employment increased to 10.63 percent but remains below the high of 10.66 percent last seen in December 2012. Health job growth exceeded nonhealth job growth at 2.8 percent year over year versus 2.1 percent.

Altarum’s Center for Sustainable Health Spending releases its Health Sector Economic Indicators monthly. The full report is at www.altarum.org/HealthIndicators.

Altarum said it expects the spending growth to moderate in the months ahead.

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