Health spending increased 3.8% during the second quarter compared with the same quarter a year ago, not adjusting for inflation. That is faster than an August estimate of 2.9%, but economists cautioned at the time that the August figure lacked crucial data and was likely too low. The estimate released on Friday includes data from a survey of consumer spending published earlier this month and is considered more accurate.
The upward revision shows the pace of health spending is largely unchanged from the historically slow pace seen in quarters before insurance expansion under the health reform law, said Charles Roehrig, an economist with the Altarum Institute Center for Sustainable Health Spending.
“It is in no way some indication that expanded coverage is suddenly accelerating the spending on healthcare services,” Roehrig said. A year-over-year comparison of health spending for the final three months of 2013 shows spending increased 4.1%, an analysis by the Altarum Institute shows. “That's not an acceleration,” Roehrig said.
The revised numbers do, however, show health spending played a larger role than previously estimated in overall U.S. economic growth last quarter of 4.6%, after adjusting for inflation, a rate that suggests improvement in the nation's economic picture.
Roehrig cautioned that Friday's estimates exclude 30% of national health spending, including spending for prescription drugs, which has seen “a major acceleration” as drug prices have increased and costly new products have entered the market. A single drug—Sovaldi, the high-priced hepatitis C medication—could contribute three-tenths of a percent to total U.S. health spending this year if sales reach the upper end of estimates. That's despite the fact that prescription drugs overall account for just under 10% of U.S. health spending.
“It's not end-of-the-world big,” Roehrig said, “but for something that's part of a relatively small share of total health spending, it's adding a significant amount to the growth rate this year.”
National health spending dropped to historic lows with the recession and has yet to rebound, raising hopes that changes in health policy may be adding to the economy's drag on the nation's typically robust growth in medical expenditures.
CMS actuaries have projected that U.S. health spending will grow 5.7% this year because of the economic rebound and greater demand for care from the newly insured. The figure includes spending on pharmaceuticals, public health and hospital construction not included in the figures released on Friday.
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