Slowdown in Health Spending Continues into 2016 While Prices Inch Up

March 11, 2016

ANN ARBOR, MI—National health spending in January 2016 was 4.9% higher than health spending in January 2015, slightly above the December 2015 growth rate of 4.8% but well below the 6.8% peak in February 2015. We estimate full-year health spending growth in 2015 at 5.9%. The health spending share of GDP was 18.1% in December.

Health care prices in January 2016 were 1.6% higher than in January 2015, up from 1.3% in December and the highest rate since December 2014. Year-over-year hospital price growth fell to 1.2% from 1.5% in December, but physician and clinical services prices rose 1.3%, a sharp break from negative rates seen in 2015. Drug price growth rose to 3.0% from 2.4% in December, breaking a 4-month string of lower readings.

The health sector added 38,100 new jobs in February, the sixth straight month of annual growth above 3%. Hospitals added 10,600 jobs, comparable to the 24-month average. Consistent with recent patterns, health jobs grew 3.2% year over year, while nonhealth jobs grew 1.7%, putting the health share of total employment at a new all-time high of 10.71%.

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).

“Health spending growth in 2015 was considerably higher than the previous 6 years, yet it decelerated throughout the year, indicating that the 2015 surge was temporary,” said Charles Roehrig, founding director of the center. “Quarterly Services Survey data released yesterday confirms this story for the final quarter of 2015. While the return to slower growth is comforting, we remain concerned about what rate of growth will be slow enough to be sustainable long term.”

Contact Information
Ken Schwartz
202-772-5062
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. Altarum employs more than 400 individuals and is headquartered in Ann Arbor, Michigan, with additional offices in the Washington, DC, area, and Portland, Maine.

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