Health Care Price Growth Hits Historic Low

ANN ARBOR, Mich.--()--Health care prices in October 2013 rose 0.9% above October 2012, the lowest reading in the fifty-plus years for which we have data. Prices for physician services rose by a mere 0.2% while prescription drug prices rose by 0.5%. Hospital prices rose by 1.2%, the lowest rate since November 1998, held down by very low Medicare payment rate increases.

National health expenditures in October 2013 grew 4.1% over October 2012. While trending up since July, expenditure growth remains near the low rate (3.9%) that we have been observing for nearly five years, and the growth rate for the first 10 months of 2013 continues to hover near a record low of 3.8%. The health spending share of gross domestic product (GDP) was 17.4% in September, roughly where it has been since the end of the recession in 2009. (“Benchmark” revisions to government GDP data released on July 31 shifted this share down from the 18% that had been previously reported.)

Health care added 28,400 jobs in November 2013, above the 24-month average of 22,800. September and October figures were revised up by a net of 14,400 jobs; earlier estimates had shown a rare decline in health jobs in September, but this has been revised to a gain of 8,400.

Nearly all of the growth in November was in ambulatory care settings, which added an above-average 26,300 jobs. Hospital growth remained low, at 1,200 jobs. The health share of total employment, at 10.72%, was just below the all-time high of 10.73% last seen in August.

These data come from the monthly Health Sector Economic IndicatorsSM (HSEI) briefs released by Altarum Institute’s Center for Sustainable Health Spending (www.altarum.org/HealthIndicators).

“October is the sixth consecutive month where health care prices have grown more slowly than prices economy-wide,” said Charles Roehrig, director of the Center. “Medicare hospital payment policies are playing a key role here, along with popular brand name prescription drugs coming off patent. Low price growth is helping to restrain the growth in health spending, but I expect some acceleration in the near future as the effects of the previous recession have likely played out and expanded coverage under the Affordable Care Act kicks in.”

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, D.C., area; Portland, Maine; and San Antonio, Texas.

Contacts

Altarum Institute
Ken Schwartz, 571-733-5709
ken.schwartz@altarum.org

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Contacts

Altarum Institute
Ken Schwartz, 571-733-5709
ken.schwartz@altarum.org