Ann Arbor, MI — At $3.66 trillion (seasonally adjusted annual rate), national health spending in June 2018 was 5.2 percent higher than it was in June 2017, and the health spending share of gross domestic product (GDP) was 17.9 percent. At the end of July, the Bureau of Economic Analysis (BEA) at the U.S. Department of Commerce released its every five-year “benchmark” revisions of the data that characterizes the U.S. economy, including the health sector. As a result:
“Because the Centers for Medicare and Medicaid Services (CMS) and BEA rely largely on the same data sources in producing their spending estimates, we can expect to see some of the same factors that caused these changes reflected in the upcoming release of the National Health Expenditure Accounts for 2017, anticipated in December,” says Dr. George Miller, Altarum Fellow, who produces the Health Sector Economic Indicators Spending Brief each month. “For the time being, enhanced GDP growth is counterbalancing health spending growth, holding the latter’s share of GDP in check. But, following the benchmark adjustment, we expect GDP to continue its recent growth trend, meaning that health spending growth that is higher than previously anticipated will become increasingly unaffordable,” says Dr. Miller.
While we note the slower growth entering the second half of 2018, we do not read too much into it yet. As always, the most recent data are preliminary and revisions can be significant. These are survey data, the readings fluctuate, and this is only one month. In addition, a major driver of slower growth this month was the loss of 1,500 jobs in the “other ambulatory services” category. This “other” category is a combination of dentists’ offices, clinical labs, and other disparate settings. It fluctuates widely, averaging about 6,000 new jobs per month over the previous 6 months, but adding more than 10,000 new jobs as recently as last month. It is likely that this category will bounce back up in the next month or two, and that may be enough to bring health job growth in Q3 2018 back in line with the previous five quarters.
Note that updated health care price data will be available on Friday, August 10. Our previous price brief (June 2018 data) showed that the Health Care Price Index rose by 1.9 percent compared to the previous year, down from 2.3 percent in April, which was the highest rate since January 2012.
View Reports: August 2018 Health Sector Economic Indicators Briefs
Interested in learning more about health spending? Watch the proceedings from our 2018 annual sustainable health spending symposium in Washington, D.C., where top policy experts discuss approaches for achieving sustainable health spending.