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2012 Likely to Be Fourth Straight Year of Low Growth in Health Spending

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Altarum headquarters in Ann Arbor. Photo by Dwight Burdette via Wikimedia Commons.

Altarum headquarters in Ann Arbor. Photo by Dwight Burdette via Wikimedia Commons.

ANN ARBOR — New data on health spending suggests the nation is in a fourth consecutive year of historically low growth, continuing a trend of roughly 4 percent growth since 2009.

Health care spending grew by just 3.9 percent in April 2012 relative to April 2011, down slightly from the 4.0 percent growth rate observed in March 2012.

Health care prices in April 2012 were 1.9 percent higher than in April 2011, but this increase has brought price growth barely above its February 2012 14-year low of 1.8 percent.

These data come from the June “Health Sector Economic Indicators” briefs released by Altarum Institute’s Center for Sustainable Health Spending. The briefs — covering health care spending, utilization, prices and employment — are at www.altarum.org/healthindicators.

In contrast to slow price and spending growth, health care employment rose by 33,000 jobs in May 2012, well above the 24-month average of 25,000. The health care share of total employment reached an all-time high of 10.8 percent — roughly one in nine jobs in the United States are now in the health sector.

“Our analysis suggests there may be a true downward trend to health spending in this country,” said Dr. Charles Roehrig, director of the Altarum Center for Sustainable Health Spending. “But it’s not time to celebrate. We don’t know the cause of this decline, and health job growth is at odds with the low spending. Something’s got to give — either spending grows, job growth slows or wages in the health industry decline.”

The health spending share of GDP, at 18.0 percent in March 2012, is down from the all-time high of 18.2 percent in June 2011. In addition, per capita health care utilization growth was 0.8 percent in April, year-over-year, continuing a downward trend observed since January 2011.

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