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Health Spending Growth Ramps Up to Pre-Recession Levels

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ANN ARBOR (WWJ) – National health expenditures in February 2014 grew 6.7 percent over February 2013, the highest rate of increase since March 2007, prior to the recession that began in December 2007.

That’s the word from the monthly Health Sector Economic Indicators briefs, released by the Center for Sustainable Health Spending at Ann Arbor’s Altarum Institute.

While governmental data attribute a portion of the growth in January and February 2014 to newly insured individuals under the Affordable Care Act, much of the acceleration in growth occurred during 2013, prior to ACA’s expanded coverage. Growth during the first quarter of 2013 was less than 4 percent, but by the fourth quarter, it had risen to 5.3 percent. The health spending share of GDP reached an all-time high of 17.7 percent in January, the most recent month for which GDP data are available.

Health care gained 19,400 jobs in March 2014, and February was revised up by 8,600, for a first quarter average gain of 15,000 jobs per month, just off the 2013 pace of 17,000. Hospitals reversed recent reported job losses to gain a modest 4,000 jobs, while nursing and residential care facilities lost 4,100 jobs. The health share of total employment, at 10.62 percent, is below the all-time high of 10.66 percent, which was hit in September 2011.

Health care prices in February 2014 were 1.2 percent higher than in February 2013, up from its historically low increase of 1.0 percent in January. The February 2014 12-month moving average, also at 1.2 percent, represents a new all-time low for Altarum’s data.

“The acceleration in health spending growth during 2013 suggests that the long, slow downward effects of the recession on health spending have finally run their course,” said Charles Roehrig, director of the center. “Since health care price growth remains historically low, the acceleration in spending seems to be driven primarily by utilization, though we have yet to see corroborating evidence.”

More at www.altarum.org/HealthIndicators.

Altarum offers research and consulting to the health care system. Altarum employs almost 400 individuals and is headquartered in Ann Arbor, with additional offices in the Washington, D.C., area; Portland, Maine; and San Antonio, Texas.

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