Health Care Price Growth Hits Historic Low
ANN ARBOR (WWJ) -- Health care prices in October 2013 rose just 0.9 percent above the levels seen in October 2012, the lowest reading in the 50-plus years of data of the monthly Health Sector Economic Indicators report, released by the Center for Sustainable Health Spending at Ann Arbor's Altarum Institute.
Prices for physician services rose by a mere 0.2 percent while prescription drug prices rose by 0.5 percent. Hospital prices rose by 1.2 percent, the lowest rate since November 1998, held down by low Medicare payment rate increases.
National health expenditures in October 2013 grew 4.1 percent over October 2012. While trending up since July, expenditure growth remains near the low rate (3.9 percent) that we have been observing for nearly five years, and the growth rate for the first 10 months of 2013 continues to hover near a record low of 3.8 percent.
The health spending share of gross domestic product was 17.4 percent in September, roughly where it has been since the end of the recession in 2009. (Revisions to government data released on July 31 shifted this share down from the 18 percent that had been previously reported.)
Health care added 28,400 jobs in November 2013, above the 24-month average of 22,800. September and October figures were revised up by a net of 14,400 jobs; earlier estimates had shown a rare decline in health jobs in September, but this has been revised to a gain of 8,400.
Nearly all of the growth in November was in ambulatory care settings, which added an above-average 26,300 jobs. Hospital growth remained low, at 1,200 jobs. The health share of total employment, at 10.72 percent, was just below the all-time high of 0.73 percent last seen in August.
"October is the sixth consecutive month where health care prices have grown more slowly than prices economy-wide," said Charles Roehrig, director of the center. "Medicare hospital payment policies are playing a key role here, along with popular brand name prescription drugs coming off patent. Low price growth is helping to restrain the growth in health spending, but I expect some acceleration in the near future as the effects of the previous recession have likely played out and expanded coverage under the Affordable Care Act kicks in."
Altarum provides research and consulting to the health care industry. It employs almost 400 people at its Ann Arbor headquarters and offices in Washington, D.C., Portland, Maine and San Antonio, Texas.
More at www.altarum.org.
