February 10, 2017

ANN ARBOR, MI—Health care added only 18,000 jobs in January 2017, the slowest monthly increase since January 2014, which marked the onset of the expanded coverage provisions of the Affordable Care Act. By comparison, the 12-month and 24-month average is 31,000 jobs per month. Benchmark revisions lowered the 24-month growth rate by nearly 15% (from 37,000 to 31,000). Health jobs grew 2.5% year over year, faster than the pace of non-health job growth at 1.5%. With these changes, the health share of total employment is at an all-time high of 10.73%.

National health spending in 2016 grew by 5.4% according to our preliminary estimates. Growth rates in 2016 among the major categories were fairly consistent, ranging from a low of 5.0% for drugs to a high of 6.0% for physician and clinical services. Hospitals grew by 5.2%. The 5.4% rate is higher than the rate of 4.8% projected by the Centers for Medicare and Medicaid Services (CMS) for 2016, but is below the 5.8% rate officially reported by CMS for 2015. We show a steady deceleration in spending growth from a high of 5.9% in May 2016, down to 4.9% in our preliminary estimate for December 2016.

Health care prices in December 2016 grew 2.1% above the December 2015 level, steady at the November rate. Nevertheless, the 2016 average price growth of 1.7% shows a marked increase from the all-time low 2015 average of 1.1%. With economy-wide inflation no longer exerting downward pressure on the health sector, health care prices can be expected to modestly increase through 2017. In December, prescription drug prices led the way at 6.2% annual growth.

These data come from the monthly Health Sector Economic IndicatorsSM briefs released by Altarum Institute’s Center for Sustainable Health Spending (http://www.altarum.org/healthindicators).

“With all of the uncertainty surrounding the future of the Affordable Care Act (ACA), it is not surprising to see the slowdown in health sector hiring in January, though we will await February and March data before deciding if this is a blip or the start of a trend,” said Charles Roehrig, founding director of the Center. “Despite the large downward revision in data on health job growth over the past two years, the data still show faster growth following expanded coverage. We showed previously that faster growth was concentrated in states with higher levels of expanded coverage and will be updating this analysis in March when benchmark revisions in state-level data become available.”

Contact Information
Sarah Litton
Manager, Communications and Public Affairs
202-772-5062
press@altarum.org

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Altarum Institute (www.altarum.org) integrates objective research and client-centered consulting skills to deliver comprehensive, systems-based solutions that improve health and health care. Altarum employs over 450 individuals and is headquartered in Ann Arbor, Michigan, with additional offices in Portland, Maine, and the Washington, D.C., area.

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