Health Spending Acceleration in 2015 is Moderating
National health spending in June 2015 was 5.7% higher than in June 2014, down from the 8-year high growth rate of 6.7% in the first quarter of 2015. The 5.7% growth rate is still, however, higher than the new Centers for Medicare & Medicaid Services 2014 estimate of 5.5%. The health spending share of gross domestic product was 18.1% in June, barely below the all-time high of 18.2% first recorded in March 2015.
The health sector added about 28,000 new jobs in July, a bit off the pace of the previous 3 months but still above the 24-month average of 26,600. In the first 7 months of 2015, the health sector has averaged more than 37,000 new jobs per month. Health job growth in July reached 3.0% year over year for the first time since 2002. The year-over-year growth rate for hospitals was 2.6%, the highest rate since May 2008. The health share of total employment increased to 10.65%, approaching the high of 10.66% last seen in December 2012.
Health care prices in June 2015 were 1.1% higher than in June 2014, the third consecutive month at that rate and only a tenth above the decade-plus low of 1.0% growth registered in August 2013. Price growth for prescription drugs moderated to 4.8%, now comfortably below its multi-decade high of 6.4% reached in December 2014. As reported in our July Trend Report, newly available price indexes for all health services by payer grew in June 2015 compared to June 2014, by -0.2%, -1.9%, respectively for Medicare and Medicaid patients, and 2.0%, and 2.2%, respectively, for private insurance patients, and others (Veterans, Tri-Care, self-pay).
These data come from the monthly Health Sector Economic IndicatorsSM briefs released by Altarum Institute's Center for Sustainable Health Spending (http://www.altarum.org/HealthIndicators).
"June health care prices across all services are down for Medicare and Medicaid but up for private payers," said Charles Roehrig, director of the Center. "This new Bureau of Labor Statistics price index tells us that the already large gap between what private and public insurers pay for the identical service is getting larger. This has obvious potential implications for patients and providers and we plan to track it closely."
Presentation slides and a full video recording are now available from our July 21, 2015, symposium, New Dimensions on Sustainable U.S. Health Spending.
Altarum Institute (www.altarum.org) integrates objective research and client-centered consulting skills to deliver comprehensive, systems-based solutions that improve health and health care. Altarum employs almost 400 individuals and is headquartered in Ann Arbor, Michigan, with additional offices in the Washington, DC, area; Portland, Maine; and San Antonio, Texas.
Ken Schwartz, 202-772-5062