Altarum Briefs on July Health Spending and Prices

According to briefs from the Altarum Center for Sustainable Health Spending, July data shows that although health spending growth appears to have plateaued during the summer, it is still rising faster than in past years and much faster than GDP is increasing.   (Altarum Briefs)   Spending in July 2015 was 5.6% higher than it was in July 2014.  GDP growth (only available through June) was 3.3%.  At the end of 2014 and in early 2015, trailing twelve month health spending growth was over 6%, so this is a slight improvement.  Hospital spending, which is 32% of the total, rose 6.5%.  The next largest category, physician and clinical spending at 20%, grew by 4.3%. Prescription drugs, 10% of the total, increased 9.7%.  Most major care categories actually are showing lower growth than a year ago, but drug spending is pulling the total increase upward.  On the price side, rises are muted, with the July overall price increase, as calculated by Altarum’s health price index, at 1.1% over July 2014.  The twelve month moving average was 1.3%.  Medical CPI was 2.5% and overall CPI was only two-tenths of a percent.  Health care prices for the last 18 months have continually grown faster than economy-wide prices.  As with total spending, drugs account for much of the price increase, at a 4.4% year-over-year rate.  Hospital prices grew only .9% and physician service prices actually fell by 1.1%.  Medicare and Medicaid prices, dictated by government, showed the smallest growth.  Health care utilization rose by 4.3% over July of 2014, continuing the trend of more rapid utilization growth, which is accounting for the most of the rise in health spending.  This is likely due to both an improved economy and expanded coverage.   Per capita utilization growth is 3.5%.  Hospital utilization has risen an average of 4.7% the last 12 months, physician services 4.8% and medication use by 5.8%.  So the theme for 2015 continues to be higher, but not overwhelming, total spending growth, largely driven by utilization increases.