According to a report from the think tank Altarum, spending in the healthcare sector is growing at the slowest pace in 3 years. The report shows that healthcare employment growth is down by 10,000 jobs per month, prices are slowing across the board, and total spending growth is down 0.5% from last year’s rate.
“The leveling off in expanded [health insurance] coverage combined with the uncertain future of recent coverage gains are the likely contributors to the slowdown in health job growth in 2017,” said Charles Roehrig, PhD, founding director of Altarum’s Center for Sustainable Health Spending. “It appears that the growth in health services utilization is also slowing. Health spending is on track for less than 5 percent growth in 2017, ending three consecutive years of greater than 5 percent growth.” Altarum bases its analysis on data from the U.S. Department of Commerce’s Bureau of Economic Analysis and the U.S. Census Bureau.
For the first 4 months of 2017, Altarum estimates the growth rate was 4.9%, with $3.49 trillion in total spending at a seasonally adjusted annual rate. This still made healthcare spending equal to 18.3% of total gross domestic product—an all-time high share.
Healthcare sector job growth is down significantly compared to the last 2 years, but the sector is still adding new jobs, growing at a rate of 2.1% year over year. Through the first 5 months of 2017, job growth in the sector averaged about 22,000 per month, versus 32,000 per month in 2015 and 2016. And because non-healthcare jobs have grown at a pace of about only 1.6% in the first part of 2017, healthcare reached an all-time high share of total employment in the U.S. of 10.75%. The total U.S. unemployment rate rests at 4.6%, the lowest in 16 years.
The report emphasized as surprising a dip in the growth rate of healthcare prices. Prices grew 1.6% year over year in April 2017, a decline from 1.9% in March 2017. This is the lowest annual growth rate since June 2016. In fact, since the beginning of the Great Recession in December 2007, healthcare prices have increased only 19.1%, while prices in the economy overall have increased 15.2%, adjusted for inflation. “Low economy-wide inflation and structural changes in the health sector may no longer be putting downward pressure on healthcare prices,” the report authors wrote, but the expected rise in healthcare prices hasn’t materialized. They noted that “extensive uncertainty affecting the health sector economy continues.”