The Latest on Health Spending and Prices

Time for another update on what the Altarum briefs tracking health care spending, prices and utilization are showing.  In August, health spending was 7.2% higher than in August of 2023.  Personal health care, the medical care we all get, is the largest part, 84%, of total national health spending and rose 7.4%.  Home health care spending rose fastest, at over 11%, while physician, prescription drug and dental spending each rose around 8%.  Hospital spending growth was slower, at around 8%.  Nominal GDP growth was around 4.7% so health care spending is growing significantly faster.

Prices increased by about 3.1% year-over-year in September (the spending and price briefs are a month apart for some reason) according to Altarum, which I believe is a serious undercount, meaning that utilization increases accounted for the rest of the spending rise.  Significant revisions were made to prior period spending, which while not spelled out, I suspect relates to understating the price growth in those periods.  If you look at premium increases and anecdotally at the many stories about providers raising prices to account for their own cost rises, you know that prices are rising at a faster pace than 3.1%.   Even at this rate, it is faster growth than for inflation overall.

This was a 3/10ths of a percent increase over the prior month’s rate of price growth.  Prices for nursing home care, 4.4%, and hospitals, 3.8%, rose fastest.  Medicaid experienced the rapidest increase among payer types, at 5.7%, while private health plan prices rose 3.8% and Medicare ones by 1.7%.  Medicaid is having to pay more to keep providers serving those patients, and the low level of Medicare payment increases is unsustainable and likely to be changed by Congress, further contributing to inflation.  (Altarum Briefs)