Health Spending Up a Moderate 5.2% in June

ANN ARBOR — National health spending in June was up 5.2 percent from the same month a year earlier to $3.36 trillion, according to the monthly Health Sector Economic Indicators released by the Ann Arbor-based healthcare consulting firm Altarum Institute.

For the first six months of the year, health spending has grown at an annual rate of 5.3 percent, below the 2015 estimate of 5.5 percent from the Centers for Medicare and Medicaid Services, but above the 4.8 percent the CMS projects for all of 2016.

The health spending share of total gross domestic product was 18.2 percent in June, tied for an all-time high with February 2016.

Health care prices in June 2016 were 1.6 percent higher than in June 2015, the highest rate of healthcare inflation since December 2014. The June 12-month moving average was 1.3 percent, the highest level since July 2015. While still very low, these rates are clearly trending upward. Year-over-year hospital price growth was steady at a 1 percent rate in June, as were physician and clinical services prices, at a scant 0.3 percent rate in June. Drug price growth spurted to 4.4 percent, the highest rate since August 2015.

Health care added 43,200 new jobs in July, above the 12-month average of 39,700 new jobs per month. Strong growth in hospital hiring put the July figure of 17,100 above the 12-month average of 15,300. Continuing the recent pattern, health jobs grew 3.2 percent year over year while non-health jobs grew 1.6 percent. The health share of total employment held at the all-time high of 10.78 percent.

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“Health spending growth has shown the expected slowing since the bump associated with Affordable Care Act expanded coverage, and could drop below 5 percent during the second half of 2016,” said Charles Roehrig, founding director of Altarum’s Center for Sustainable Health Spending.

More of Roehrig’s thoughts on health care spending increases, which he believes are unaffordable in the long term, at his blog.

The full video from our July 12 symposium, “Sustainable U.S. Health Spending in the Next Administration,” is now available at this link.

Altarum Institute provides research and consulting to the healthcare industry. It employs almost 400 people and has offices in Ann Arbor, Portland, Maine, Rockville, Md., Silver Spring, Md., San Antonio, Texas, and Washington, D.C.

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