CENTER FOR SUSTAINABLE HEALTH SPENDINGaltarum.org/sites/default/files/uploaded-related-files... · 2018-10-15 · spending data (e.g., first quarter 2013 year-over-year spending growth

HIGHLIGHTSs National health expenditures (NHE) in June 2013 grew 4.3%,

relative to June 2012.s The June NHE growth rate was 0.8% greater than gross do-

mestic product (GDP) growth over the same period. s The health spending share of GDP was 17.5% in June. Prior

to recent “benchmark” revisions to the underlying government data, we had been reporting this share at roughly 18%.

s The 17.5% share is up from 16.0% at the start of the recession in December 2007. This increase is partly attributable to slow GDP growth rather than high health spending growth, as the June 2013 health spending share of potential GDP (PGDP) was 16.7%.1

s Spending in June, year-over-year, increased in all major catego-ries over the past year except dental services, which declined by 1.3%. Home health care grew the fastest, at 8.1%.

HEALTH SPENDING

In June 2013, health spending increased to a seasonally adjusted annual rate (SAAR) of $2.94 trillion, slightly higher than its value of $2.93 trillion in May. June’s health spending accounted for 17.5% of GDP – slightly lower than its May value of 17.6%. As a share of PGDP, June’s spending was at 16.7% – equal to its May value. On a year-over-year basis, health spending in June grew by 4.3% – up from its May value of 4.1% (Exhibit 1). Exhibits 7 and 8 show long-term comparisons.

Exhibit 1. Year-Over-Year Growth Rates in NHE

Revised government data show share of GDP devoted to health spending to be lower than previously reported

Na�onal Health Expenditures (NHE) and Gross Domes�c Product (GDP)*

Source: Altarum monthly NHE estimates (see Methods on page 4); monthly GDP is fromMacroeconomic Advisers and Altarum estimates; potential GDP (PGDP), defined as what GDPwould be at full employment, is from the quarterly Congressional Budget Office estimates convertedto monthly by Altarum. *Note: Spending in trillions of dollars, seasonally adjusted annual rate

GDPNHENHE Share of GDPNHE Share of PGDPGrowth from Prior 12 Months NHE GDP NHE minus GDP NHE minus PGDP

June 2011 15.42

2.70 17.5%16.4%

3.8%3.2%0.6%0.2%

June 2012 16.21

2.82 17.4%16.6%

4.4%5.1%

-0.7%1.0%

May 2013 16.59

2.93 17.6%16.7%

4.1%2.7%1.4%0.9%

June 2013 16.77

2.94 17.5%16.7%

4.3%3.4%0.8%0.8%

Source: Altarum monthly NHE estimatesCompares monthly NHE to the same month from the previous year

Since the start of the recession in December 2007, real health spending (using the GDP deflator) through June has increased by 14.7% (an annual rate of 2.5%). During this same period, real GDP excluding health spending fell by more than 6% in mid-2009 and is now 2.7% above its December 2007 level. With health care included, real GDP in June is 4.6% above its pre-recession level (Exhibit 2).

Exhibit 2. NHE and GDP: Cumulative Percentage Change (Constant Dollars) Since December 2007

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ALTARUM INSTITUTE Spending Brief #13-08: June 2013 Data 1

August 16, 2013

Source: Altarum monthly NHE estimates; monthly GDP is from Macroeconomic Advisers and Altarum estimates

Note: Shading indicates recession period

SPENDING BRIEF

© 2013 Altarum Institute. All rights reserved.

Health Sector Economic IndicatorsSM

CENTER FOR SUSTAINABLE HEALTH SPENDING

Insights from Monthly National Health Expenditures Estimates through June 2013

-10%

-5%

0%

5%

10%

15%

20%

Dec2007

Mar2008

Jun2008

Sep2008

Dec2008

Mar2009

Jun2009

Sep2009

Dec2009

Mar2010

Jun2010

Sep2010

Dec2010

Mar2011

Jun2011

Sep2011

Dec2011

Mar2012

Jun2012

Sep2012

Dec2012

Mar2013

Jun2013

NHE NHE Es�mate GDP GDP Less NHE

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

Jun2011

Sep2011

Dec2011

Mar2012

Jun2012

Sep2012

Dec2012

Mar2013

Jun2013

HEALTH SPENDING BY CATEGORYIn June 2013:s Hospital spending was $937 billion (SAAR) and represented

32% of total health spending (Exhibits 3 and 5).s Physician and clinical services spending was $574 billion,

representing slightly more than 19% of total health spending.s Prescription drug spending was $287 billion, 10% of total

health spending.s Nursing home and home health spending combined were

$237 billion, 8% of total health spending.s Spending on personal health care goods and services accounted

for 84% of total health spending (other major components include public health, research, construction, and net cost of private insurance).

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ALTARUM INSTITUTE Spending Brief #13-08: June 2013 Data 2

Hospital care32%

Physician & clinical services

19%

Dental services4%

Prescrip�on drugs10%

Nursing home5%

Home health care3%

Remaining personal health

care11%

Other health spending

16%

Source: Altarum monthly NHE estimatesNote: See Exhibit 5 for complete list of NHE categories

Growth over the past 12 months: Home health care grew most rapidly among the major categories (8.1%). An apparent decline in spending for dental services that we observed last month has persisted in June (at 1.3%). For the previous 12-month period ending June 2012, hospital care showed the highest growth among the major categories, at 5.7%, while nursing home care declined by 2.0% (Exhibits 4 and 6).

Exhibit 4. NHE Year-Over-Year Growth for Selected Categories

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

Hospitalcare

Physician/clinical services

Prescrip�ondrugs

Nursing home

Home health care

Dentalservices

June 2013 annual growth June 2012 annual growth

DISCUSSION

On July 31, the Bureau of Economic Analysis (BEA) of the Department of Commerce released a comprehensive “benchmark” revision of the entire history of the national income and product accounts (NIPA) –- a primary source of our spending data and the basis for the GDP estimates that we report. The revision included improvements to the definitions, classifications, and methods used to create the NIPA, as well as newly available and revised source data. In addition to producing significant changes to historical health spending data (e.g., first quarter 2013 year-over-year spending growth was revised from 3.8% to 4.0%), this revision had the happy result of boosting GDP so that the share devoted to health has dropped substantially. What had been oscillating near 18% is now averaging 17.4% in the post-recession period (with a reading of 17.5% in June 2013). Most of this upward GDP revision reflects BEA’s decisions to incorporate expenditures for research and development and to include entertainment, literary, and artistic originals as fixed investment.2

The revised definitions, methods, and data used in measuring GDP will also affect PGDP values. However, PGDP, which is computed and reported by the Congressional Budget Office, is not scheduled for revision until November, after all underlying data become available. In the meantime, we have adjusted existing PGDP data to approximate the impact of the GDP revisions.

The Centers for Medicare and Medicaid Services (CMS) will shortly release a second major set of revisions to the underlying government data used in our spending estimates, with their annual update to health expenditure forecasts. We use these forecasts to estimate spending in categories that are not captured by the BEA data (mostly non-personal health spending in such categories as public health, research, and structures and equipment). When combined with the effects of the BEA benchmark revisions, the CMS update will help determine whether the moderation in health spending that has been observed since 2009 is, in fact, continuing.

Source: Altarum monthly NHE estimates

1 For further discussion of PGDP, see our blog: http://healthpolicyforum.org/post/case-tracking-health-spending-share-potential-gdp.2 For more details, see http://www.bea.gov/scb/pdf/2013/03%20March/0313_nipa_comprehensive_revision_preview.pdf.

Altarum Institute is a 501(c)(3) nonprofit health care research and consulting organization. Altarum integrates independent research and client-centered consulting to deliver comprehensive, system-based solutions that improve health and health care.

The Center for Sustainable Health Spending (CSHS) was launched in 2011 to lead Altarum Institute’s research on investigating the cost growth trends and key drivers of U.S. health spending and to formulate policy strategies to help bend the cost growth curve.

The Health Sector Economic IndicatorsSM reports are a monthly pub-lication of Altarum’s CSHS and provide an analysis of health spending, employment, and prices. For more information, contact Charles Roehrig, PhD, at 734-302-4600 or [email protected]. George Miller, PhD (principal author), Paul Hughes-Cromwick, Ani Turner, and Matt Daly, PhD, contributed to this brief. Media Contact: Ken Schwartz, 571-733-5709, [email protected]. For more information, please visit www.altarum.org/cshs.

Exhibit 3. Health Spending by Category, June 2013

CENTER FOR SUSTAINABLE HEALTH SPENDING

Follow us on Twitter: @ALTARUM_CSHS

Exhibit 6. NHE Year-Over-Year Growth Rates by Detailed Category

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ALTARUM INSTITUTE Spending Brief #13-08: June 2013 Data 3

Source: Altarum monthly NHE estimates; monthly GDP is from Macroeconomic Advisers and Altarum estimatesNote: Spending in billions of dollars, seasonally adjusted annual rate (SAAR)

Source: Computed from Exhibit 5Note: Compares monthly NHE to the same month from the previous year

DETAILED HEALTH SPENDING

Exhibit 5. Monthly NHE Estimates by Detailed Category

GDP

NHE

Personal health care

Hospital care

Physician and clinical services

Other prof. services

Dental services

Other health, residential, and personal care

Home health care

Nursing home care

Prescription drugs

Durable medical equipment

Nondurable medical products

Program administration and net cost of private health insurance

Government public health activities

Research

Structures and equipment

NHE Share of GDP

NHE Share of PGDP

$14,942.6

$2,599.3

$2,188.7

$815.7

$518.1

$69.6

$105.0

$127.9

$70.8

$142.0

$258.4

$36.3

$45.0

$181.8

$79.7

$49.1

$99.9

17.4%

16.4%

$15,423.1

$2,697.8

$2,277.9

$848.9

$541.2

$73.3

$108.3

$132.4

$74.7

$150.7

$262.6

$38.8

$47.0

$187.9

$78.5

$50.0

$103.5

17.5%

16.4%

$16,208.8

$2,815.3

$2,375.0

$897.6

$562.4

$74.4

$111.4

$142.3

$77.9

$147.7

$271.8

$40.7

$48.8

$202.2

$82.9

$48.3

$106.9

17.4%

16.6%

$16,767.3

$2,935.3

$2,467.1

$937.4

$574.4

$77.2

$110.0

$150.8

$84.2

$152.3

$286.8

$42.9

$51.2

$222.6

$86.5

$48.1

$110.9

17.5%

16.7%

June2010Levels (in Billions)

June2011

June2012

June2013

GDP

NHE

Personal health care

Hospital care

Physician and clinical services

Other prof. services

Dental services

Other health, residential, and personal care

Home health care

Nursing home care

Prescription drugs

Durable medical equipment

Nondurable medical products

Program administration and net cost of private health insurance

Government public health activities

Research

Structures and equipment

NHE Minus GDP

NHE Minus PGDP

3.2%

3.8%

4.1%

4.1%

4.5%

5.4%

3.1%

3.6%

5.6%

6.1%

1.6%

7.1%

4.3%

3.3%

-1.5%

1.9%

3.6%

0.6%

0.2%

5.1%

4.4%

4.3%

5.7%

3.9%

1.5%

2.8%

7.5%

4.3%

-2.0%

3.5%

4.7%

3.9%

7.6%

5.6%

-3.3%

3.3%

-0.7%

1.0%

3.4%

4.3%

3.9%

4.4%

2.1%

3.8%

-1.3%

5.9%

8.1%

3.1%

5.5%

5.6%

4.8%

10.1%

4.4%

-0.4%

3.7%

0.8%

0.8%

June2011Levels

June2012

June2013

CENTER FOR SUSTAINABLE HEALTH SPENDING

TIME SERIES TRACKER

Exhibit 7. Year-Over-Year Percentage Change in Health Spending and GDP

Exhibit 8. Monthly NHE as a Percentage of Monthly GDP

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ALTARUM INSTITUTE Spending Brief #13-08: June 2013 Data 4

Source: Altarum monthly NHE estimates; monthly GDP is from Macroeconomic Advisers and Altarum estimatesNote: Lightly shaded bars denote recession periods

Source: Altarum monthly NHE estimates. Monthly GDP is from Macroeconomic Advisers. Potential GDP is from the U.S. Congressional Budget Office and has been converted to monthly estimates.Note: Lightly shaded bars denote recession periods.

Methods. Altarum’s estimates are based on (1) Bureau of Economic Analysis (BEA) monthly health spending (http://www.bea.gov/iTable/iTable.cfm?ReqID=12&step=1) and (2) Centers for Medicare & Medicaid Services annual NHE estimates (1990–2011) and projections (2012); https://www.cms.gov/NationalHealthExpendData/). BEA spending categories are matched to NHE account (NHEA) components using information presented in: Hartman, M. B., Kornfeld, R. J., & Catlin, A. C. (2010, September). A reconciliation of health care expenditures in the national health expenditures accounts and in gross domestic product. Survey of Current Business. For all NHEA personal health care categories except “other health, residential, and personal care,” monthly estimates are based on BEA spending adjusted to NHEA using annual ratios. For the remaining categories, NHE estimates and projections are allocated across months using a simple trend. Annual ratio adjustments through 2011 are based on NHEA actuals and ensure that monthly estimates sum exactly to NHEA annual amounts. Ratios used to adjust BEA spending for months in 2012 are taken from 2011.

10%

11%

12%

13%

14%

15%

16%

17%

18%

19%

1990 1995 2000 2005 2010

Health Share of GDP Health Share of Poten�al GDP

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

1990 1995 2000 2005 2010

NHE Change GDP Change Poten�al GDP Change

CENTER FOR SUSTAINABLE HEALTH SPENDING