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Health Share of Economy Drops

ANN ARBOR (WWJ) -- The Center for Sustainable Health Spending at the Ann Arbor-based Altarum Institute reports that health care prices grew 1.1 percent in July 2013 over July 2012, up from the May growth rate of 1 percent -- which was the lowest Altarum has ever recorded. The company's data on health care prices goes back to January 1990.

The center reported that the 12-month moving average, at 1.6 percent, represents a new low for its data. National health expenditures grew 4.3 percent in June, and spending growth is averaging 4.1 percent for the first half of 2013, barely above the record low levels seen annually since 2009.

Once-every-five-year government "benchmark" data revisions underlying these results also show a dramatic drop in the health share of the economy. Largely a result of higher gross domestic product estimates, the share devoted to health, which had stabilized around 18 percent, is now averaging 17.4 percent in the post-recession period, and Altarum estimates a reading of 17.5 percent for June 2013.

As reported earlier, health care employment rose by only 2,500 jobs in July 2013, well below the 24-month average of 22,000, and the lowest increase since July 2003. While ambulatory care settings continue to add jobs, hospitals have lost 13,000 jobs over the past three months. The health sector share of total employment fell slightly to 10.71 percent in July, slightly below its all-time high rate of 10.73 percent, first reached in December 2012.

These data come from the center's monthly Health Sector Economic Indicators briefs, which can be viewed at www.altarum.org/HealthIndicators.

"The benchmark revisions affecting data going all the way back to 1929 leave a lot to digest, but our indicators show near record low price growth, continued restrained national health spending, and new health employment data at long last reflecting the health expenditure slowdown," said Ani Turner, deputy director of the center. "We look forward to incorporating the new official health spending projections -- to be released next month and will also include an update for 2012 -- into our estimates."

Altarum Institute, www.altarum.org, offers research and consulting to the health care industry. It employs more than 400 people at its Ann Arbor headquarters and offices in the Washington, D.C., area; Atlanta, Ga.; Portland, Maine; and San Antonio, Texas.

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