Late News: Slow growth

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-over-year 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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