Health Spending Grows By Only 3.8 Percent In May

ANN ARBOR -- Health spending in May 2012 grew by a modest 3.8 percent compared to May 2011, continuing a trend of roughly 4 percent annual growth since 2009.

Health care prices in May 2012 were 2.0 percent higher than in May 2011, ticking up a tenth from April. On a 12-month moving average basis, price growth is lower now than at any time since January 1999.

These data come from the July Health Sector Economic Indicators briefs released by the Center for Sustainable Health Spending at the Ann Arbor-based Altarum Institute. The briefs, covering health care spending, utilization, prices, and employment, are at www.altarum.org/healthindicators.

A rise in June of only 13,000 health sector jobs aligns with slow price and spending growth. This increase contrasts sharply with the May growth in health care employment of 33,000 and is well below the 24-month average of 25,000. With a disappointing total payroll job growth of only 80,000 in June, the health care share of total employment reached another all-time high of 10.8 percent, representing nearly one in nine U.S. jobs.

"Our analysis continues to show stable health spending growth hovering around the 4 percent mark, and this 3½-year trend is entirely unprecedented," said Dr. Charles Roehrig, director of the Altarum Center for Sustainable Health Spending. "As a result, health spending as a share of GDP has held steady at about 18 percent over this same period and, were it not for disappointing GDP growth, could actually be falling. Our Center is in the midst of interesting work to understand what has been driving this moderation in health spending."

At 18.0 percent in April 2012, the health spending share of GDP is just below the all-time high of 18.1 percent in June 2011. Per capita health care utilization grew at 0.9 percent year over year in May and is averaging 1.1 percent growth for the last 12 months and 1.3 percent growth over the last 6 months.

Altarum employs more than 400 individuals and has additional offices in the Washington, D.C., area; Atlanta, Ga.; Portland, Maine; and San Antonio, Texas.