Health Spending Growth Up In 2011, But Trending To Record Lows at Year’s End

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ANN ARBOR — The January Health Sector Economic Indicators briefs released Friday by the Altarum Institute’s Center for Sustainable Health Spending indicate that over the first 11 months of 2011, health spending has grown at an annual rate of 4.5 percent, compared to the 3.9 percent increase for 2010, which has just been officially released by the Centers for Medicare & Medicaid Services.

This growth was driven by high spending early in 2011 followed by a gradual, steady decline.

Spending grew by only 3.6 percent in November 2011 relative to November 2010. Thus, while spending for 2011 as a whole is up, the nation will likely enter 2012 with health spending growth near the record-low levels experienced in 2009 and 2010.

Health care price inflation was 2.0 percent in November, a rate that has been steady throughout 2011, indicating the early 2011 jump in health spending can be traced to a bounce back in per capita health care utilization, which exhibited almost no growth in 2010.

Health employment in December rose by 23,000 jobs, just under the 2-year average of 24,000. The health spending share of GDP was 17.8 percent in October 2011, up from 16.4 percent at the start of the recession (December 2007) but down from the all-time high of 18.2 percent, reached in June 2011.

The complete set of briefs, providing monthly data on health care spending, prices, and employment, can be viewed at www.altarum.org/healthindicators.

“Our data build upon and extend the results issued by the Centers for Medicare & Medicaid Services earlier this week and reflect the latest revisions in data from the Bureau of Economic Analysis,” said center director Charles Roehrig. “Hospital spending has much to do with the slowing growth trend through 2011. And while both spending and utilization jumped early in the year, they declined throughout the year to bring us to near record low growth at year’s end.”

Altarum’s Health Sector Economic Indicators briefs offer timely analysis of health sector employment, spending, and prices. To receive an email notification regarding the monthly release of Health Sector Economic Indicators, please visit http://www.altarum.org/publications-resources-health-systems-research/sign-up.

Altarum Institute (www.altarum.org) integrates objective research and client-centered consulting skills to deliver comprehensive, systems-based solutions that improve health and health care. Altarum employs more than 400 individuals and is headquartered in Ann Arbor, Mich., with additional offices in the Washington, D.C., area; Sacramento, Calif.; Atlanta, Ga.; Portland, Maine; and San Antonio, Texas.

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