Health Spending Growth Below 5% for Fourth Straight Month

ANN ARBOR — National health spending in February 2016 was 4.8 percent higher than health spending in February 2015, up from the 4.5 percent year-over-year growth rate observed in January 2016 and December 2015, according to the monthly Health Sector Economic Indicators released by the Ann Arbor-based healthcare consultants Altarum Institute.

However, that’s still modest growth, Altarum said — the fourth consecutive month of growth under 5 percent year-over-year.

Health spending has held steady at 18 percent of gross domestic product for the four consecutive months from October 2015 through January 2016, and Altarum officials said that means health spending growth appears to have leveled off, at least temporarily.

Health care prices in February 2016 were 1.7 percent higher than in February 2015, up from 1.6 percent price growth in January and the highest rate since September 2014. The February 2016 12­month moving average held at 1.2 percent price growth.

Year-over-year hospital price growth fell to 1 percent from 1.2 percent in January. Drug price growth rose to 3.4 percent from 3 percent in January, reclaiming the title as the fastest growing price component. Since June 2014, hospital prices for Medicare, Medicaid, and private pay patients have fallen 1.5 percent, fallen 2.3 percent, and grown 4.3 percent respectively.

The health sector added 36,800 new jobs in March, consistent with the first quarter 2016 average of 39,000 new jobs per month and the fourth quarter 2015 average of 40,000. Hospitals added 10,200 jobs, lower than the first quarter 2016 average of 14,000 and the fourth quarter 2015 average of 15,000. Consistent with recent patterns, health jobs grew 3.4 percent year over year while nonhealth jobs grew 1.8 percent, increasing the health share of total employment to a new, all-time high of 10.73 percent.

For the full report from Altarum’s Center for Sustainable Health Spending, visit http://www.altarum.org/healthindicators.

“The growth rate in the services component of health spending is slowing and seems headed back to rates experienced in the years prior to expanded coverage,” said Charles Roehrig, founding director of the center. “On the other hand, the slowing growth rate in spending on prescription drugs was interrupted by a jump in February and remains well above pre-expanded coverage levels. We will look forward to March data on prescription drugs to see if February was an aberration.”

Altarum provides research and consulting to the healthcare industry. Besides its Ann Arbor headquarters, its nearly 400 employees work in offices in Washington, D.C. Silver Spring, Md., Rockville, Md. and Portland, Maine.

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