Health Spending Up 5.5% in October—but Trending Down
Health spending in October 2015 was up 5.5% compared to October 2014, continuing the slowdown from the peak of 6.8% growth in February 2015. This puts 2015 on track for about 6% growth, a significant increase over the 5.3% growth just reported for 2014. The official estimate of health spending growth in 2013 was revised downward to a record-low 2.9% and, as a result, the estimated health spending share of gross domestic product is now below the 18% threshold.
Health care prices in October 2015 were 1.2% higher than in October 2014, up from 1.0% in September, a rate that tied the multi-decade low hit in August 2013. Year-over-year hospital prices surged to 1.5% growth due to higher Medicare prices as fiscal year 2016 began. Prescription drug prices rose 3.7%, continuing a downward trend from the multi-decade high of 6.4% seen in 2014.
The health sector added 23,800 jobs in November, a solid increase but much lower than the unusually large gains seen in each of the past 7 months. The health share of total employment remained at the record high 10.7% first reached in October. Health jobs grew 3.2% year over year, while nonhealth jobs grew by 1.7%.
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).
"Much has been made of the 5.3% growth in health spending reported for 2014, the highest rate during the Obama presidency," said Charles Roehrig, director of the Center. "Our data suggest that growth will be higher in 2015, fueled by an even larger impact of expanded coverage and barely slower growth in spending on prescription drugs. However, these effects have peaked in early 2015, and spending rates have begun to trend down in our data. We are optimistic that 2014 and 2015 will appear as an interruption, not an end, to historically low growth rates in health spending."
Please see Altarum's Health Affairs blog posts, The Impact of New Hepatitis C Drugs on National Health Spending and Expanded Coverage Appears to Explain Much of the Recent Increase in Health Job Growth.
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