Health Sector Trend Report, March 2018

Trend Reports | March 28, 2018

This quarterly report examines current trends in U.S. health care spending, prices, utilization, and employment. Highlights include:

  • Health spending growth increased to an estimated 4.6% compared to 4.3% growth in 2016. The increase is due to a rebound in prescription drug spending in 2017, but future revisions to account for rebates could reduce the 2017 growth estimate.
  • Rebates from prescription drug manufacturers have been growing as a share of total drug costs for Medicare, Medicaid, and private health plans. In this circumstance, both spending and prices grow more slowly after adjusting for rebates.
  • If the rebate adjustment in 2017 is the same as it was in 2016, the estimated growth in prescription drug spending will fall from its current estimate of 5.0% to 1.3%. This would bring overall health spending growth down to 4.2%.
  • Higher rebates on hepatitis C drugs have contributed to a dramatic slowdown in their net cost.
  • Health care price growth averaged 1.2% in Q4 2017, bringing the average for 2017 to 1.5%. This is slower than the economy-wide price growth of 1.8% in 2017 and would likely be lower if adjusted for rebates.
  • Health job growth averaged 25,000 in Q4 2017, bringing the average for all of 2017 to 24,000.

About Altarum's Quarterly Health Sector Trend Reports

With funding from the Robert Wood Johnson Foundation, Altarum provides a quarterly analysis of key trends in health care spending, prices, utilization, and employment. These reports make direct use of the Quarterly Services Survey (QSS), the timeliest source of detailed, survey-based spending information for health care services, which account for more than 70% of national health spending. Each quarter, when new QSS data are released (March, June, September, and December), we publish this report.

These trend reports are related to, but distinct from, Altarum's Health Sector Economic Indicators briefs, which are issued every month.

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