Altarum’s Health Spending, Price and Utilization Briefs Through September

Time for another look at the Altarum Institute’s Center for Sustainable Health Spending’s monthly reports on health spending.  The latest reports have data through the end of September 2015.  (Altarum Spending Brief)  (Altarum Price Brief)  Year-over-year health spending grew 5.5% from September 2014 to September 2015, to an annualized $3.3 trillion dollars or 18.3% of GDP.  That is a lot of money.  But the rate of growth has steadily slip back since December of 2014 and the early months of 2015, when it was over 6.5%.  Thank God it is only growing twice as fast as the economy now!! (Keep in mind too, that health care is almost a fifth of that GDP, so it is a big contributor to the overall growth rate.  Without health care, growth is only 2.2%)  For 2015 YTD, health spending has increased 6.2%.  Drugs continue to lead the way.  They are 10% of total health spending but rising at an 8.4%.  Hospital spending is the single biggest service category, 32% of the total, and grew at 5.9% year-over-year.  Physician and other outpatient services grew at 4.3%.

In terms of prices, the pace of increase continues to be very moderate, led by actual decreases in physician and other outpatient prices.  From September 2014 to September 2015, the rise was only 1% and the 12 month moving average was 1.2%.  Hospital prices rose only .7%, while drug prices grew 4.2%, but that is down from the rate of growth earlier in the year.  Combining the spending and price increase data gives an implicit per capita year-over-year utilization increase of 3.7% and a 12 month moving average one of 4.1%.  That is a meaningful change in utilization. The obvious point to make here is that we are seeing significant per capita growth in utilization of health care services.  When health care unit prices begin to rise faster, as they inevitably will, we are going to see even higher and more painful total health care spending growth.