December 10, 2012

October Health Spending Growth Heads Lower

ANN ARBOR, Mich. — National health expenditures in October 2012 grew by 3.5 percent relative to October 2011, down two-tenths from the September rate, and representing the sixth consecutive month of below 4 percent growth. At 3.7 percent, the six-month average growth rate is now below the all-time low (full-year) rate of 3.8 percent recorded in 2009. Some of the very low growth in October, however, may be attributable to Hurricane Sandy.

October 2012 health care prices were 2.1 percent above October 2011, a rise from the historically low 1.9 percent September rate, but still well-contained. Hospital price growth rose to 2.6 percent, and nursing home care prices rose by 2.3 percent from a low September rate of 1.0 percent.

The latest employment data show 20,000 health sector jobs added in November 2012, a sharp departure from the revised 34,000 new jobs in October, though close to the 24-month average of 25,000. It is unclear the extent to which the decline in this data from previous months are related to Hurricane Sandy. Health employment as a share of the total hit another all-time high of 10.81 percent.

These data come from the December 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.

“This slow U.S. health spending growth should constitute a bright spot in the complex health entitlement negotiations that lay ahead. However, until we more fully understand the causes, we cannot predict that health spending growth rates have been permanently lowered,” said Charles Roehrig, director of the Center. “After what’s sure to be a prolonged and difficult battle, I do believe that we will eventually bring spending under control, but only because we have little choice.”

The health spending share of gross domestic product was 17.9 percent in September 2012, below the all-time high of 18.3 percent in June 2011. Per capita health care utilization averaged 1.2 percent growth over the last 12 months, and recent downward pressure on physician visits continues.

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