July 15, 2016

ANN ARBOR, MI—National health spending in May 2016 was 5.0% higher than in May 2015. Spending on prescription drugs dropped to 5.2% growth, continuing its decline from the 12.2% spike in 2014. The health spending share of gross domestic product (GDP) stood at 18.1% in April as moderate health spending growth of 5.2% still far outpaced anemic GDP growth of 3.3%.  Official government projections released on July 13 anticipate spending growth of 4.8% for all of 2016, the lowest rate since 2013.

Health care added 38,500 new jobs in June, consistent with the 12-month average of 40,100 new jobs per month. Growth in both ambulatory care settings and hospitals was barely under the pace seen over the past year, with ambulatory care adding 19,300 jobs and hospitals adding 15,000 jobs in June. Health jobs grew 3.2% year over year while non-health jobs grew 1.6%, increasing the health share of total employment to a new all-time high of 10.78%.

Health care prices in May 2016 were 1.5% higher than in May 2015, the third consecutive month at this rate. The May 2016 12­month moving average was 1.2% for the fourth straight month. Year-over-year hospital price growth rose modestly to 1.0% from 0.8% in April. Physician and clinical services prices rose only 0.3% in May, down from 0.6% growth in April. Drug price growth fell to 3.3% from 4.0% in April.

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

“Wednesday’s release by the Centers for Medicare & Medicaid Services of their 10-year health spending projections shows growth for full-year 2016 at 4.8%,” said Charles Roehrig, founding director of the Center. “This is consistent with our partial-year data provided that the downward trend continues in the coming months. Unfortunately, GDP growth for 2016 is being projected at a paltry 3% and, thus, what appears as moderate growth in health spending is still well in excess of GDP growth, and progressively unaffordable.”

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

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Altarum is a nonprofit organization that creates and implements solutions to advance health among vulnerable and publicly-insured populations.