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Healthcare spending is growing along with prices, up 5% over 2017

Spending by private payers has grown at a faster clip, with growth hitting 7.4 percent compared to 2.3 percent for public payer spending.

Jeff Lagasse, Associate Editor

Prices and spending in healthcare are growing steadily, but at a moderate pace, according to a new report from the Altarum Center for Value in Health Care.


The first half of the year saw just 1.9 percent growth, due partly to price increases of only 2 percent in the second quarter. And you have to go pretty far back to find quarterly price growth above 2 percent -- the last time it happened was in 2012.

Still, growth has been steady, and the country's healthcare spending habits are at a level nearly double that of similar countries. Spending per capita in the U.S. is more than $9,000, compared to just over $5,000 in other Western nations.

Because prices are growing slowly but steadily, spending is doing the same, with healthcare spending in 2018's second quarter 5 percent more than during the same timeframe in 2017. Year over year, the growth rate for the first half of the year was 4.8 percent.

Spending on healthcare services was the main culprit, the data showed. It represented more than 70 percent of all healthcare spending, and jumped from 4.2 to 4.9 percent from the first quarter to the second.

Prescription drug costs are rising as well, by 3.7 percent in the first quarter and 3.4 in the second, averaging 3.5 percent growth for the first half of the year.

Spending by private payers has grown at a faster clip, with growth hitting 7.4 percent compared to just 2.3 percent for public payer spending. 


It has long been known that the U.S. spends more on healthcare than any other country, but a report from The Wall Street Journal this summer highlighted the extent to which this is true, showing healthcare spending will soon reach 20 percent of national GDP -- by far the highest among major economies.

Over the past 58 years or so, medical costs have risen about 2,000 percent, and the consumer price index has jumped about 700 percent. 

And since the turn of the century, the cost of prescription drugs has leapt 69 percent, physician and clinical services have gone up 23 percent, and hospital care has risen 60 percent.

Twitter: @JELagasse
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