2017 National Health Spending Growth Estimated at 4.7 Percent

February 13, 2018

Ann Arbor, MI — Health Care Price Growth Jumps Driven by Hospital Prices; Health Jobs Grow Moderately

National health spending grew by 4.7% in 2017, according to Altarum’s latest Health Sector Economic Indicator Reports. Though reflecting a more sustainable growth rate that was primarily held down by moderate growth in hospital spending, this rate still exceeds the 4.1% growth recorded for GDP in 2017. “This represents a continuation of the relentless increase of the health care share of our economy,” said Charles Roehrig, Institute Fellow. “It is important because a large, and growing, share of health care is publicly funded and the tax revenues required to fund these public expenditures are linked to GDP growth which lags health spending growth. Thus, we are continuing on an unsustainable path of faster growth in government spending commitments than in the taxes being collected to fund those commitments.” Displaying modest growth in December 2017 was overall hospital spending, while hospital price growth surged to 2.2%—a 4-year high. This growth was driven by a jump in hospital price growth for Medicare patients to 3.2%—the highest rate in more than 7 years, and the first time Altarum has reported a public price growth faster than private. The beginning of 2018 showed moderate overall job growth in the health sector, but strong hospital growth. Hospitals added 12,700 jobs in January 2018, 60% of the total 20,600 health jobs added.

Health Care Spending

At $3.57 trillion, national health spending in December 2017 was 4.6% higher than it was in December 2016. Spending in December 2017, year over year, increased in all major categories. Spending on physician and clinical services grew the fastest, at 5.3%. Growth in spending on hospital care was the slowest, at 3.0%.

Health Care Employment

Health care added 20,600 new jobs in January 2018, slightly less than the 2017 average of 24,000 new jobs per month. More than half of this growth was in hospitals, which added 12,700 jobs, double the 2017 monthly average of 6,000.

Health Care Prices

Health care prices in December 2017 rose 1.5% above December 2016, compared with 1.2% growth in November, and 1.0% in October. Price growth averaged 1.5% for all of 2017. Combining price and health spending data shows implicit per capita health care utilization growth year over year at 2.1% in December—below its 12-month average of 2.3%.

View Reports: February 2018 Health Sector Economic Indicators Briefs

Altarum is a nonprofit organization that works with federal and state agencies and foundations to design and implement solutions to improve the health of individuals with fewer financial resources and populations disenfranchised by the health care system. We achieve measurable results by combining our expertise in public health and health care delivery with technology, workforce training and continuing education, applied research, and technical assistance. Our innovative solutions lead to better health for beneficiaries and better value for payers.