February 7, 2013

Health Spending Growth Near 4 Percent for Fourth Year; Price Growth at 14-Year Low

ANN ARBOR, Mich. — National health expenditures grew at an estimated annual rate of 4.3 percent in 2012, a bit higher than the 3.9 percent experienced for each of the years 2009-2011. While this estimate is subject to revisions, it portends a fourth consecutive year of record-low growth compared to all previous years in the 50-plus years of official health spending data.

Health care prices in December 2012 rose by 1.7 percent compared to December 2011, the lowest year-over-year growth since February 1998. The 12-month moving average at 2.0 percent was the lowest reading since December 1998.
 
Health care employment rose by a 23,000 jobs in January 2013, similar to the 24-month average of 24,000. So-called benchmark revisions reduced total 2011-2012 health jobs by 70,000 while boosting overall jobs by 598,000.

These data come from the February 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.

“While slightly above the flat three-year experience of 3.9 percent, our data demonstrates continued, historically low health care spending growth. This is driven by exceptionally low health care price growth coupled with moderate utilization growth,” said Charles Roehrig, director of the Center. “The paradox of slow spending growth and high employment gains is less pronounced in light of the revised, lower payroll employment numbers but still calls out for an explanation.”

The health spending share of the gross domestic product (GDP) was 18.2 percent in December 2012, slightly higher than the 17.9 percent share reported by the Centers for Medicare & Medicaid Services for 2011. This is attributable, in part, to a decline in GDP during the fourth quarter of 2012. With continued moderate growth in economy-wide payroll jobs, the health sector share of total employment hit yet another all-time high of 10.74 percent, compared to 10.41 percent in July 2009. Implicit per capita health care utilization averaged 1.4 percent growth over the last 12 months, and the severe flu outbreak appears to be moderating.

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