January 15, 2013

Historically Low Health Spending Growth for 4th Year?

ANN ARBOR, Mich. — Over the first 11 months of 2012, national health expenditures (NHE) grew at an annual rate of 4.3 percent, compared to the 3.9 percent increase for 2011 reflected in data released last week by the Centers for Medicare & Medicaid Services (CMS). CMS also shows a 3.9 percent growth rate for 2009 and 2010 – the first time in the 50-plus years of official health spending data that growth was below 4 percent. 2012 is thus shaping up as the fourth straight year of historically low growth. NHE in November 2012 grew by 4.1 percent relative to November 2011.

Health care prices in November 2012 were 2 percent higher than in November 2011, with a 12-month moving average at 2.1 percent that is fractionally above its 14-year low.
 
Health care employment rose by 45,000 jobs in December 2012, the second highest increase in over a decade, and well above the 24-month average of 26,000.

These data come from the January 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.

“We were surprised to see the official spending data for 2011 show a repeat of the unprecedented 3.9 percent figure for the third straight year, since our advance estimates of 2011 were somewhat higher. Nevertheless, our data for 2012 suggest continued slow growth,” said Charles Roehrig, director of the Center. “We continue to be concerned by the disconnect between health spending, which has been stable as a share of GDP  since mid-2009, and health employment, which has grown steadily as a share of total employment over the same period.”

The health spending share of GDP was 18 percent in October 2012, the same as in July 2009. The combination of an average level of overall job growth and very strong health sector growth in December drove the health sector share of total employment to a new all-time high of 10.84 percent, compared to 10.41 percent in July 2009.  Implicit per capita health care utilization averaged 1.3 percent growth over the last 12 months, though the severe flu outbreak may raise utilization in the next few months.

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