Hospital, physician office prices remain flat in August

The moderate inflation that has helped slow health spending continued last month, as prices paid by insurers to physician offices and acute-care hospitals remained flat, federal figures show.

The latest snapshot of prices, released by the U.S. Bureau of Labor Statistics, captured no change in the prices paid in August by public and private insurers. The stalled prices and weaker demand for healthcare since the recession have led to the slowest growth in health spending in recent years since records were first collected more than 50 years ago.

Moderate overall inflation has contributed to the sluggish price growth in healthcare, economists say, as have blockbuster prescription drugs that have lost patent protection and cuts to Medicare spending, such as spending reductions required by the sequestration provision of the Budget Control Act.

Policymakers and economists tracking are closely tracking health spending for signs of how quickly it may accelerate. The expansion of insurance coverage that began this year under the Patient Protection and Affordable Care Act is expected to boost spending by increasing demand, though that has not materialized in preliminary data through the first six month of the year. The introduction of new high priced, high demand treatment for hepatitis C is anticipated to boost healthcare spending this year.

During the year that ended in August, physician office prices grew 0.8%, an uptick from the decline of 0.1% during the prior 12 months, but well below the 1.6% average growth during the last decade for 12-month periods that end in August.

For the year that ended last month, acute-care hospital prices increased 1.5%, a decrease from 1.7% the prior year and moderate compared with the 2.9% average increases for the years ended in August since 2005.

Healthcare prices edged slightly upwards through the first half of the year, but remain historically low, an Altarum Institute analysis notes. “Low economy-wide inflation continues to exert downward pressure on health care prices, although the latter are now trending at about 0.6 percentage points above the historic lows of 2013,” the institute's economists wrote last month.

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