Health Care Price Growth Lowest Since December 1997; Spending Kicks-off 5th Year of Moderate Growth

ANN ARBOR, Mich.--(BUSINESS WIRE)--Health care prices in January 2013 were 1.5 percent higher than in January 2012, two-tenths lower than the December rise, and the lowest reading since a 1.3 percent rate in December 1997. The 12-month moving average at 2.0 percent is the lowest since a 1.9 percent figure recorded in November 1998.

National health expenditures (NHE) in January 2013 grew at an annual rate of 4.1 percent relative to January 2012, the same rate as for December, and a level that would signify the fifth consecutive year of moderate spending growth. We estimate that NHE 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.

Health care employment rose by 32,000 jobs in February 2013, surpassing the 24-month average of 24,000, but January was revised down to 13,000 from its originally reported figure of 23,000.

These data come from the March Health Sector Economic Indicators^SM 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.

“It appears that a less than full-employment economy coupled with pressures specific to the health care industry are combining to forcefully restrain health care price growth. The last time we saw health care prices rising so slowly was back in the ‘golden era’ of managed care in the mid- to late-1990s. Low health care spending growth continues to follow this longer-term pattern of exceptionally controlled price growth coupled with moderate utilization growth,” said Charles Roehrig, director of the Center.

The health spending share of the gross domestic product was revised to 18.0 percent in December 2012, up from 16.4 percent at the start of the recession in December 2007. Even with better than expected economy-wide payroll job growth (up 236,000), the health sector share of total employment hit yet another all-time high of 10.74 percent, compared to 10.36 percent in June 2009. Implicit per capita health care utilization averaged 1.4 percent growth over the last 12 months.

Altarum Institute (www.altarum.org) integrates objective research and client-centered consulting skills to deliver comprehensive, systems-based solutions that improve health and health care. Altarum employs more than 400 individuals and is headquartered in Ann Arbor, Mich., with additional offices in the Washington, D.C., area; Atlanta, Ga.; Portland, Maine; and San Antonio, Texas.