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November Health Spending Briefs

By January 26, 2016Commentary

The January Altarum Institute Center for Sustainable Health Spending briefs on spending and price trends, covering 2015 through November, are now available.  (Altarum Briefs)   At a high level, national health spending for the trailing twelve month period ending in November 2015 was 5% higher than that in November 2014.  GDP growth in roughly the same time frame was 3%.  Total spending was $3.27 trillion at an annual rate.  Think about that for a moment–we spend over $3 trillion on health care in this country.  While still growing faster than GDP, the rise in health spending has actually slowed since hitting a peak of over 6.5% in February 2015.  Longer term, since December 2007, the start of the recession, real health spending has grown 23% while real GDP, other than health care, has only grown 6.7%.  Health spending is an outsized contributor to GDP rises.

In the past 12 months, spending on home health care has increased the fastest, up by 9.6%, while drug spending rose 9.2%.  Hospital spending rose a little over 4%, while physician spending grew around 4.7%.  Compared to last year, drug spending growth has slowed while home health spending has accelerated.  Looking at prices, on a year-over-year basis they rose only 1.1%.  Hospital prices rose at slightly more than that rate, while physician prices have actually declined.  Drug prices of course continue to rise.  Looking at the spending and price data together suggests that utilization has risen 3% year-over-year in November 2015.  Health care prices currently are not growing faster than general economy prices, which is a welcome trend, but one which I believe is unlikely to hold.  Even government programs that have been able to mandate prices, they are currently actually declining for Medicare and Medicaid, are likely to come under pressure to raise them, while private payers already appear to be experiencing such pressure, with prices rising 2.3%.   2016 will be very interesting for spending and prices.

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