Historically Low Health Care Price Inflation Holds Health Spending Growth to 3.8% in August

October 9, 2013

ANN ARBOR, MI — National health care prices in August 2013 were 1.0% higher than in August 2012, down one-tenth from the July 2013 level and equal to the May 2013 rate, which was the all-time low in our series that extends back to January 1990. The 12-month moving aver­age, at 1.5%, is a new low for our data. Hospital price growth fell to 1.5%, its lowest rate since 1.3% in December 1998, while physician prices grew a scant 0.3%. Hospital price growth plays a dominant role in the total index via its spending weight, and its low August reading was complemented by a decline in home health prices (-0.2%) and durable medical equipment (-0.1%), plus moderate growth otherwise.

National health expenditures (NHE) in August 2013 grew 3.8% over those of August 2012 and kept the annualized growth rate at 3.8% for 2013 to date. The health spending share of GDP was 17.4% in July 2013, the same as at the conclusion of the Great Recession in June 2009. (This is well below the 18% share that has been previously reported over the past few years and is strictly due to a change in GDP accounting that occurred in July 2013.)

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

Due to the federal government closure, labor data for September, scheduled for October 4 release, were not reported. (When new labor data are ready, we will issue an updated HSEI Labor Brief.)

“Health care prices have been growing more slowly than prices in the rest of the economy for 4 consecutive months,” said Charles Roehrig, director of the center. “If this continues for the rest of 2013, we may find that spending growth for 2013 has dropped below the record low 3.9% growth experienced since 2009.”

Contact Information
Ken Schwartz
571-733-5709
ken.schwartz@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. A nonprofit serving clients in the public and private sectors, Altarum employs more than 400 individuals and is headquartered in Ann Arbor, MI with additional offices in the Washington, DC area; Portland, ME; and San Antonio, TX.

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