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Altarum Spending Briefs

By March 11, 2020Commentary

It has been a while since we reviewed the series of briefs the Altarum Institute puts out on national health spending.  Altarum regularly looks at national data on health spending and puts out monthly spending, price and labor briefs.  Those briefs give a sense of emerging trends.   (Altarum Briefs)   Year-over-year health spending was up 5.7% in December 2019.  This is the fastest growth in the last few years, and compares to 3.7% year-over-year growth in December 2018.  Health spending continues to rise faster than GDP growth.  Hospital spending was 33% of spending, physician spending was 19%, prescription drugs, 10% and nursing and home health care, 8%.  Personal health spending accounted for 84% of the total, with the remainder being for public health, research, and the net cost of private health insurance (i.e., profits and administrative expense).  Spending on drugs grew fastest in the trailing 12 months, at 11.7%, while physician services rose only 2.9%.  Hospital spending grew at about 6.8%.  The net cost of private insurance rose only 3.5%.  On the pricing front, in January 2020 prices rose 2.1% from those in January 2019.  Hospital prices increased 2.7%, physician price growth was at .8% and drug price growth was 2.5%  By comparison, overall inflation was 2.5%.  Combining the spending and price analyses leads to the conclusion that utilization rose 3.6% on a per capita basis, which is a bump up from the last two years, and a cause for concern.  Hospital utilization increased 3.4%, physician services rose 2.2% and drug use by 7.7%.  Due largely to the spread of generic drugs, for an extended period in late 2017 through late 2019, health care inflation was below general economy inflation, but that has reversed for the last 6 months.  By payer, hospital prices rose 3.9% for private insurance, 2.9% for Medicare and declined .8% for Medicaid.  Overall, the recent reports suggest that both prices and utilization are accelerating, which is obviously not good news for spending, but both factors are subject to quick turnarounds or cyclical behavior.

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