Latest Altarum Health Spending Reports

The Altarum Institute issues monthly and quarterly reports tracking various aspects of health spending.   (Altarum Trend Report)   For May 2016, spending rose 5% over May 2015.  Year-over-year growth for the first quarter has been revised up to 5.1%.  Nominal GDP was up 3.3% in the same period.  Since the end of 2007 real health spending has grown 25.7%, while real GDP has risen 7.7%.  Over the last 12 months, home health care spending rose most, by 8.8%, followed by dental services at 8%.  Prescription drug spending growth has declined to a little over 5%.  Nursing home care is the slowest rising category, at 2.6%.  While spending increases have ameliorated somewhat from last year, they remain well above GDP and income growth.  Health care prices in May are estimated to have risen 1.5%, continuing relatively restrained increases.  This means that health care utilization rose 3.5%, continuing the trend of utilization contributing more to spending growth than prices do, a reversal of the situation several years ago.  Drug prices grew only 3.3%, a decline from prior months, but still the fastest increasing prices.  Hospital prices rose 1% and physician ones only .3%.  Much of the muted provider price growth is attributable to Medicare and Medicaid, which experience lower price increases due to their fiat price setting.  There is an enlarging gap between government program prices and private health plan prices.  For example, since June 2014, Medicare hospital prices have risen -1.6%, Medicaid -2.2% and private pay 4.6%.  It is highly unlikely that the lack of growth in government program prices can be sustained without serious access problems occurring.  And while utilization increases have slowed as the coverage expansion from the reform law has become fully instituted, we should anticipate that this moderation also is unlikely to persist, due to aging of the population and other factors.  Health spending remains a serious problem, for governments and individuals.