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Health Spending Growth Up in Early 2011 But Trending Toward Record Lows at Year’s End

January 16, 2012
Trying to forecast health spending for 2012?

ANN ARBOR, Mich.–(BUSINESS WIRE)–The January Health Sector Economic Indicators briefs released today by Altarum Institute’s Center for Sustainable Health Spending indicate that over the first 11 months of 2011, health spending has grown at an annual rate of 4.5 percent, compared to the 3.9 percent increase for 2010, which has just been officially released by the Centers for Medicare & Medicaid Services. This growth was driven by high spending early in 2011 followed by a gradual, steady decline.  Spending grew by only 3.6 percent in November 2011 relative to November 2010. Thus, while spending for 2011 as a whole is up, the nation will likely enter 2012 with health spending growth near the record-low levels experienced in 2009 and 2010.

Health care price inflation was 2.0 percent in November, a rate that has been steady throughout 2011, indicating the early 2011 jump in health spending can be traced to a bounce back in per capita health care utilization, which exhibited almost no growth in 2010. Health employment in December rose by 23,000 jobs, just under the 2-year average of 24,000. The health spending share of GDP was 17.8 percent in October 2011, up from 16.4 percent at the start of the recession (December 2007) but down from the all-time high of 18.2 percent in June 2011.

Of interest:  “growth was driven by high spending early in 2011 followed by a gradual, steady decline … Thus, while spending for 2011 as a whole is up, the nation will likely enter 2012 with health spending growth near the record-low levels experienced in 2009 and 2010.”

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