Slow growth

Al­tarum In­sti­tute: Higher health­care prices un­likely

Modern Healthcare - - LATE NEWS - Jaimy Lee

Health­care prices are grow­ing at his­tor­i­cally low rates, ac­cord­ing to new es­ti­mates from the Al­tarum In­sti­tute. And be­cause of a re­vi­sion to fed­eral bench­mark data, re­searchers es­ti­mate that the por­tion of the econ­omy con­sumed by health­care is less than pre­vi­ously thought. The per­cent­age of the gross do­mes­tic prod­uct has av­er­aged about 17.5% (rather than 18%) since the end of the re­ces­sion, they now be­lieve.

Spend­ing on health­care rose 4.3% from June 2012 to June 2013, about 0.8% faster than the pace of GDP growth.

The in­sti­tute’s monthly briefs on health sec­tor eco­nomic in­di­ca­tors sug­gest that weak growth in the in­dus­try is ex­ert­ing pres­sure on prices even as eco­nomic growth has started to ac­cel­er­ate. Prices for hos­pi­tals and physi­cian and clin­i­cal ser­vices each rose less than 2% over the 12 months through June, and pre­scrip­tion drug prices re­ported a year-overyear price drop of 0.1%.

“We see very lit­tle like­li­hood of sig­nif­i­cantly higher health­care prices in the near term,” the re­port’s re­searchers wrote.

Health­care prices grew 1.1% from July 2012 to July 2013 and were only slightly higher than the May 2013 growth rate of 1.0%, the low­est rate in the in­sti­tute’s decades-long se­ries.

Hos­pi­tal prices grew 1.7% in July 2013 com­pared with the same month last year, the low­est since a 1.6% rate recorded in Jan­uary 2011. Prices for physi­cian and clin­i­cal ser­vices rose 0.3% dur­ing the same pe­riod.

Paul Hughes-Cromwick, se­nior health econ­o­mist for the Al­tarum In­sti­tute’s Cen­ter for Sus­tain­able Health Spend­ing, said it’s likely that hos­pi­tal-price growth rates would con­tinue to hover around 2% be­cause of pres­sures from se­ques­tra­tion and the Pa­tient Pro­tec­tion and Af­ford­able Care Act.

The pre­scrip­tion-drug de­cline re­flected the low­est pre­scrip­tion drug read­ing in the in­sti­tute’s data­base, which Hughes-Cromwick at­trib­uted to the on­go­ing shift to generic drugs and away from brand-name phar­ma­ceu­ti­cals. “There’s been all this talk of per­son­al­ized medicine and ex­pen­sive can­cer drugs,” he said. “There are some of those but cer­tainly not enough to move the over­all me­ter on drug prices.”

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