Skip to main content

Altarum Health Spending Briefs for January

By March 21, 2016Commentary

The Altarum Health Spending Briefs give a monthly look at health spending growth, health price trends and by inference, utilization trends. (Altarum Briefs) Last year began with a surge in the rate of spending growth, which moderated in the middle year, moderate meaning it stayed around 5%, which I never tire of reminding people means it is still way above GDP growth, general inflation or most importantly, the rate of personal income growth.  Year-over-year, January 2016 health spending was 4.9% higher, compared to nominal GDP growth of 3%.  This represents an annual rate of spending of about $3.29 trillion, or 18% or all GDP.  Since December 2007, the start of the recession, real health spending has grown 24% while real GDP has grown only 9.3% including health care, or 6.5% without it.  Hospital spending is 32% of total health spending, physician and related services are 20%, prescription drug is 10% and home health and nursing home are about 8%.  Home health care is growing fastest at 11.4%, while drug spending rose 6.3%, hospital care around 3.7% and physician services 6.2%.

On the unit price side, in January 2016 prices were 1.6% higher than in January 2015, up from the year-over-year rise of 1.3% in December.  The 12 month moving average rose to 1.2%.  Hospital prices rose 1.2%, physician prices 1.3% (and note that physician prices actually declined during much of 2015), and drug prices 3%.  During the same period the CPI  rose 1.4%.  As you would expect, Medicare and Medicaid prices are growing less quickly than private sector prices, which are negotiated.  Using total spending and the price component, utilization growth on a per capita basis can be inferred to have risen 2.5% year-over-year or 3.3% overall, lower than the twelve-month average of 3.7%.  Hospital utilization rose 3.6%, physician 5.9%, home health 6% and drugs 3.9%.  The big danger, given the significant utilization increases, is that prices begin to accelerate more rapidly, giving a boost to overall spending.

Leave a comment