2015 Acceleration in Health Spending Growth is Moderating

ANN ARBOR — Health care spending growth is moderating as the effects of the improved economy and the Affordable Care Act spread through the economy, according to a monthly report from the Ann Arbor health care consultants Altarum Institute.

The Health Sector Economic Indicators released by Altarum’s Center for Sustainable Health Spending also found that health care price inflation remains low.

National health spending in August 2015 was 5.7 percent higher than in August 2014, continuing a gradual decline from the peak growth rate of 6.8 percent from a year earlier, hit in February. Prescription drug spending grew the fastest of the major categories at 9.2 percent year over year, though that’s down from its peak of 14.6 percent growth year over year, hit in December 2014.

Health care prices in August 2015 were 1.2 percent higher than in August 2014, breaking a string of 1.1 percent growth months. But Altarum said that even with this slight acceleration, prices are growing only two tenths above the decade-plus low of 1.0 percent growth registered in August 2013. Year-over-year hospital prices rose 1.0 percent in August, the highest since September 2014, though low in historical context. Physician and clinical services prices fell 1.0 percent and have been near minus 1 percent inflation for eight straight months. Prescription drug prices rose 4.7 percent, the first uptick in price growth in 2015.

The health sector added a strong 34,400 new jobs in September, the report said. Hospitals continued robust hiring, adding 15,500 jobs in August, and have added 124,000 jobs so far in 2015, 54,000 in the third quarter alone. The health share of total employment increased each month in 2015, reaching 10.69 percent in September, a new all-time high. Health jobs grew 3.2 percent year over year, while nonhealth job growth dipped from a post-recession peak of 2.3 percent at the beginning of 2015 to 1.8 percent in September.

For the full report, visit www.altarum.org/HealthIndicators.

“We have previously noted the spending growth acceleration and large health-sector employment gains associated with expansion of health insurance coverage, stronger economic growth, and special factors such as new hepatitis C drugs,” said Ani Turner, deputy director of the center. “We are seeing some evidence that these impacts are declining as 2015 progresses, but whether health spending growth continues to moderate or the historic slowdown is over will depend on how these potentially temporary drivers continue to play out, and the degree to which the Affordable Care Act and private-sector forces continue to exert cost containment pressure to drive lasting structural change.”

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