Overall Health Sector Expansion at Slowest Pace in Three Years
ANN ARBOR, MI—Altarum’s Center for Sustainable Health Spending released today the latest trends in the health sector. With health care employment growth down by 10,000 per month, prices slowing across the board, and total spending growth also down 0.5% from last year’s rate, private and public sector purchasers may feel some relief compared to the acceleration of health spending in the past three years.
"The leveling off in expanded coverage combined with the uncertain future of recent coverage gains are the likely contributors to the slowdown in health job growth in 2017," said Dr. Charles Roehrig, founding director of Altarum’s Center for Sustainable Health Spending. "It appears that the growth in health services utilization is also slowing. Health spending is on track for less than 5 percent growth in 2017, ending three consecutive years of greater than 5 percent growth."
Health Care Employment
Health care added 24,300 new jobs in May, and job growth through the first five months of 2017 is averaging just under 22,000 jobs per month, versus 32,000 per month in 2015 and 2016.
The 2017 slowdown is occurring in both hospitals and ambulatory care. Hospitals added 5,500 jobs per month in early 2017, compared to 10,000 in 2016. Ambulatory settings (physician offices, clinics, home health) added 14,000 jobs per month in 2017, compared to 20,000 in 2016.
Despite the slowdown, the health share of total employment is at an all-time high of 10.75% because health jobs grew 2.1% year over year, lower than the 2.5% average growth in 2016 but still faster than the pace of non-health job growth, at 1.6%.
The total unemployment rate dropped to 4.3%, the lowest in 16 years. The broadest measure of unemployment, the U-6, dropped to 8.4%, the rate seen prior to the recession.
Health Care Prices
Health care price growth in April continued to slow, rising just 1.6% above April 2016, down from 1.9% in March, and the lowest annual growth rate since June 2016.
Year-over-year hospital price growth rose one-tenth to 1.8% and physician and clinical services price growth rose from 0.4% to 0.5% in April. Annual drug price growth in April fell to a 3.1% rate, continuing its fall from the 20+ year high of 7.0% in November 2016.
The small increases in hospital and physician price growth were easily outweighed by declining price growth in six other categories, especially drugs, dental services and medical products, hence the lower HCPI rate.
National Health Spending
National health spending growth also slowed in April to 4.4% year over year, the lowest growth rate in 16 months. For the first four months of 2017, the growth rate is estimated at 4.9%. Spending totaled $3.49 trillion (seasonally adjusted annual rate).
The health spending share of GDP was 18.3% in April, and while representing a downward revision from last month, this remains an all-time high share.
Spending in April 2017, year over year, increased in all major categories. Home health care grew the fastest, at 5.7%. Dental services grew at a 2.0% rate, the slowest among the major categories.
View the complete results in Altarum’s Health Sector Economic IndicatorsSM briefs (http://www.altarum.org/health_indicators).
Hear from leading experts about the future of health policy at Altarum’s upcoming symposium “Beyond the ACA: Health Policy and Sustainable Health Spending on July 18, 2017. Learn more and register at http://www.etouches.com/altarumbeyondACA