Health Spending Up 6.2% in April, GDP at 18.2%

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National health spending in April 2015 was 6.2% higher than in April 2014. At $3.2 trillion, health spending now represents 18.2% of gross domestic product, a new all-time high. Spending in April 2015, year over year, increased in all major categories. Prescription drug spending grew the fastest, by 10.5%, but is showing signs of moderation. Hospital spending grew at a rapid 8.5%, presumably driven by increased utilization and less uncompensated care, as prices have been stagnant.

The health sector added 46,800 new jobs in May, well above the 12- and 24-month average gains of about 34,000 and 24,000, respectively. Health care has added more than 400,000 jobs in the past 12 months, growth not seen since 1991. Hospitals are averaging nearly 13,000 new jobs per month so far in 2015, after little growth in 2013 and early 2014. The health share of total employment increased to 10.63% but remains below the high of 10.66% last seen in December 2012. Health job growth exceeded nonhealth job growth at 2.8% year over year versus 2.1%.

Health care prices in April 2015 were 1.2% higher than in April 2014, only two-tenths higher than the decade-plus low of 1.0% growth registered in August 2013. Hospital prices rose by a low 0.5%, while physician and clinical services prices plunged to -1.1%, reflecting the end of enhanced Medicaid primary care payments. Prescription drug prices rose 5.6%, down from March but still near the 13-year high of 6.4% reached in December 2014.

These data come from the monthly Health Sector Economic Indicators briefs released by Altarum Institute’s Center for Sustainable Health Spending.

“The 6.2% health spending growth rate for April is about the same as that for the fourth quarter of 2014 but is well below what we expect to show for the first quarter of 2015 in our next Trend Report due out later this month,” said Charles Roehrig, director of the Center. “This report will reflect results from the just-released Quarterly Services Survey, which shows 7.3% growth in spending on health care services in the first quarter of 2015 compared to the first quarter of 2014. We expect the first quarter growth rate to represent a peak, and that spending growth will moderate as 2015 continues to unfold.”

About Altarum Institute

Altarum Institute integrates objective research and client-centered consulting skills to deliver comprehensive, systems-based solutions that improve health and health care. Altarum employs almost 400 individuals and is headquartered in Ann Arbor, Michigan, with additional offices in the Washington, DC, area; Portland, Maine; and San Antonio, Texas.