By Drew Altman, WSJ Wadhington Wire Feb. 17, 2015
As people hear that health spending is beginning to grow more quickly again, many may recall reports they may have read recently about the shockingly high cost of some medical procedure, or how much a hospital CEO is being paid, or what they pay for their own prescription drugs. The prices Americans pay for health services are a big problem, but the culprit behind the renewed growth we are seeing in spending is not the rising price of health services.
There is an excellent series of reports from the nonprofit Altarum Institute analyzing this. Altarum’s Center for Sustainable Health Spending is a leading source of economic analysis on health spending and costs. As the chart above–based on preliminary estimates from Altarum–shows, health spending grew 5.6% in December over the preceding year; it was up 4.5% in December 2013 compared with December 2012; and the 2012 figures were up 3.3% from the previous December. But health-care prices in December 2014 were just 1.8% above those in December 2013. Hospital prices grew just 0.9% in 2014. Drug prices have been rising more rapidly: 6.4% between December 2013 and December 2014. That can be a problem for consumers, but drugs represent 10% of national health spending so it doesn’t contribute a lot to overall spending increases.