Health Care Prices Continue Slow Growth in April at 2 Percent Annual Rate

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Health care prices in April 2011 were just 2.0 percent higher than in April 2010 — the fourth consecutive month of 2 percent or less growth, according to this month’s Health Sector Economic Indicator report released by Altarum Institute’s Center for Sustainable Health Spending.

The Ann Arbor-based institute said prices for hospitals and for physicians each grew by only 1.5 percent, year over year, in April. These sectors were large enough to offset the 4.3 percent growth in prices for prescription drugs and hold overall growth at 2 percent.

The complete report, based upon data from the Bureau of Labor Statistics and other data released in May, can be viewed at www.altarum.org/healthindicators.

“For the first time since 1997-98, when managed care was in full bloom, health care inflation has stayed at 2 percent or less for four consecutive months,” said the director of the center, Charles Roehrig. “We look for continued low growth in health spending in the second quarter of 2011 although some of the recent moderation in prices is being offset by a rebound in utilization growth.”

While this brief emphasizes prices, it also incorporates data from Altarum’s March health spending brief, thus revealing the striking role of utilization in health spending growth trends. It shows that health care utilization has dominated prices in determining the rate of growth in national health spending.

“Over the past 10 years or so, the rate of increase in health care utilization has slowed considerably and has been the main contributor to slower spending growth,” Roehrig said. “However, over the past few months, the credit goes to slower price growth.”

Altarum’s Health Sector Economic Indicators reports, published monthly, offer an innovative and timely analysis of health sector employment, spending and prices. To view this, or past reports, visit www.altarum.org/healthindicators. You may also join Altarum’s distribution list to receive email alerts of all future releases of the “Health Sector Economic Indicators” reports.

Altarum offers research and consulting in health and health care. Altarum employs more than 400 and has additional offices in the Washington, D.C., area; Sacramento, Calif.; Atlanta, Ga.; Portland, Maine; and San Antonio, Texas.

More at www.altarum.org.

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