Healthcare spending, prices on the rise

Horizon has reworked its forecast.
Money.

Although healthcare spending has been growing at steady clip, prices have been relatively flat over the past year, according to data from the Altarum Institute's Center for Sustainable Health Spending.

Healthcare spending grew at a 5.2 percent annualized pace between June 2015 and June of this year, according to Altarum's recently released health sector economics report. That puts total healthcare spending for 2016 on pace to reach $3.36 trillion, up from $3.34 trillion in 2015. At that rate, healthcare spending would total 18.2 percent of the U.S. GDP, compared to 18.1 percent in 2015.

Although a recently released report by the Robert Wood Johnson Foundation and the Urban Institute concluded that the Affordable Care Act has cut spending, many experts believe healthcare spending will comprise 20 percent of the U.S. economy by the end of next decade.

Hospital spending comprised the biggest proportion of total spending, at 32 percent, the report notes. In June, hospital spending was on a pace to reach $1.065 trillion for the year, up from $1.02 trillion in 2015. Physician and clinical services comprised the second largest proportion, at 20 percent. In June, it was on pace to total $672.3 billion, up from $634 billion in 2015.

By comparison, Altarum's pricing brief notes that healthcare pricing grew at a relatively sedate annualized pace of 1.6 percent in June 2016, although that is higher than the 12-month moving average of 1.3 percent. It was also higher than the price growth of 1.1 percent reported in June 2015. It is at its biggest monthly annualized rate increase since December 2014, according to Altarum.

Prices for hospital services rose at an annual rate of 1 percent in June, up from an 0.8 percent growth rate in June 2015 and 1.8 percent in June 2014.

Pharmaceuticals had the biggest pricing increase among all sectors of healthcare, with an annualized growth rate of 4.4 percent, down from 4.8 percent in June 2015.

- read the Altarum spending report (.pdf)
- check out the Altarum pricing report (.pdf)

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