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Health Care Spending Growth Remains At Historic Low

ANN ARBOR (WWJ) -- Here's more evidence that something is keeping health care price and spending increases low in the American economy.

The Ann Arbor health care consulting firm Altarum Institute reported Wednesday that national health care prices in August 2013 were 1 percent higher than in August 2012, down one-tenth from the July 2013 level and equal to the May 2013 rate, which was the all-time low in Altarum's history of recording the data, which extends back to January 1990.

The 12-month moving average, at 1.5 percent, is a new low for the Altarum data. Hospital price growth fell to 1.5 percent, its lowest rate since 1.3 percent in December 1998, while physician prices grew a scant 0.3 percent.

Hospital price growth plays a dominant role in the total index via its spending weight, and its low August reading was complemented by a decline in home health prices (down 0.2 percent) and durable medical equipment (down 0.1 percent), plus moderate growth otherwise.

National health expenditures in August 2013 grew 3.8 percent over those of August 2012 and kept the annualized growth rate at 3.8 percent for 2013 to date. The health spending share of GDP was 17.4 percent in July 2013, the same as at the conclusion of the Great Recession in June 2009. That's well below the 18 percent share that has been previously reported over the past few years and is strictly due to a change in GDP accounting that occurred in July 2013.

These data come from the monthly Health Sector Economic Indicators briefs released by Altarum Institute's Center for Sustainable Health Spending, www.altarum.org/HealthIndicators.

Due to the federal government closure, labor data for September, scheduled for Oct. 4 release, were not reported. Altarum says it will issue a new HSEI Labor Brief about the growth of health care employment when new labor data are ready.

"Health care prices have been growing more slowly than prices in the rest of the economy for four consecutive months," said Charles Roehrig, director of the center. "If this continues for the rest of 2013, we may find that spending growth for 2013 has dropped below the record low 3.9 percent growth experienced since 2009."

Altarum Institute provides research and consulting to the health care industry. Based in Ann Arbor, it has additional offices in the Washington, D.C., area; Portland, Maine; and San Antonio, Texas.

More at www.altarum.org.

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