National Health Spending Reports from Altarum

By October 24, 2019 Commentary

We periodically like to check in on the Altarum Institute’s Center for Sustainable Health Spending, which issues regular briefs on national spending and prices for health care.  The latest briefs cover the period through August for spending and September for pricing.   (Altarum Briefs)   According to Altarum’s analysis, annualized health spending rose to $3.87 trillion in August or 4.5% more than in August 2018.  This is only slightly ahead of nominal general economic growth and it is a lower growth rate than that experienced in August 2018, at 5.5%, but over the long term from December 2007, real health spending has risen 36% while GDP has grown 18%.  Spending grew in all categories, led by prescription drugs at 8.5% year-over-year.  Home health spending was slowest, at 1.5%.  That is a flip from August 2018 when home health was the fastest rising at 9.8% and drugs the slowest at 4.7%.  Hospital and physician spending growth has slowed this year.  Hospital spending is $1.27 trillion, or 33% of the total, physician spending was $758 billion or 20% of the total and drugs were $378 billion or 10% of all spending.

On the price side, the increase was 1.6% from September 2018 to September of this year, a slight uptick from the August year-over-year figure.  Hospital prices were up 2.3%, physician ones .8% and drug prices declined 1.1%.  Health care prices have generally marched in lockstep with economy wide prices for several years.  But these total price figures mask some stark differences between payers.  For example, since June of 2014, prices paid by Medicaid for hospital services grew by .4%, those paid by Medicare rose 6.1% and for commercial payers they rose 14.7%.  This explains why people covered by private health plans feel more pricing pain.  The combination of the health spending and price analysis leads to the conclusion that health care utilization is growing by 3.3% in total or 2.7% on a per capita basis, which is an uptick.  Finally, Altarum also produces a regular brief covering jobs in health care, which is important because labor is the dominant cost for providers of health care services.  Thus far in 2019, 20% of all new jobs have been in health care, so that is important for the national economic picture as well.  38,800 new jobs in health care were created in September, 75% in the outpatient or ambulatory care sector.  That is 2.6% year-over-year job growth.  Health care now accounts for 11% of all jobs.

Kevin Roche

Author Kevin Roche

The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry through Roche Consulting, LLC. Mr. Roche is available to assist health care companies through consulting arrangements and may be reached at khroche@healthy-skeptic.com.

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