August Health Spending Grows by Only 3.8 Percent But Hospital Prices Jump

ANN ARBOR -- National health expenditures in August 2012 grew by 3.8 percent relative to August 2011, equal to the July rate, and representing the fourth consecutive month of growth below 4 percent. The 2012 average rate of growth in spending at 4.1 percent is down sharply from the estimated 2011 average of 5.2 percent and helps alleviate fears of a new acceleration in overall health spending.

Conversely, a spike in hospital prices drove overall health care prices in August 2012 to 2.4 percent above their August 2011 level, the highest reading in almost two years.

Finally, the latest health employment data show 44,000 health sector jobs added in September 2012, the second highest employment gain in a decade, and significantly higher than the 24-month average of 25,000.

These data come from the October 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.

"Low health spending growth in August plus downward revisions to earlier months highlight the moderate growth trend in 2012," said Charles Roehrig, director of the center. "This slowing trend is consistent with recent reports of low premium increases for 2012 and suggests that the jump in 2011 spending was a blip rather than a new upward trend. We will, however, closely watch the employment and price escalations as their persistence could signal renewed spending increases. We will be particularly interested in whether September data confirm the spike in hospital prices observed in August."

The health spending share of gross domestic product fell to 17.9 percent in July 2012, below the all-time high of 18.3 percent in June 2011, but substantially higher than the 16.4 percent figure at the start of the recession in December 2007. Per capita health care utilization averaged 1.4 percent growth for the last 12 months and 1.0 percent growth over the last six months.

Altarum Institute provides research and consulting to the health care sector. It employs more than 400 at its Ann Arbor headquarters and offices in Washington, D.C., Atlanta, Ga., Portland, Maine and San Antonio, Texas.

More at www.altarum.org.