Category: Health Care Costs

GDP: Health Services Accounts for 30 Percent of Services Spending Growth

BEAToday’s second estimate of Gross Domestic Product for the third quarter indicates growth in health services spending is maintaining a disproportionate share of still slow GDP growth.

Spending on health services grew faster (5.0 percent, annualized, in current dollars) than spending on non-health services (3.9 percent) or non-health personal consumption expenditure (3.0 percent) from the second quarter (Table I). The growth in health services spending ($25.1 billion, annualized) accounted for 17 percent of all GDP growth ($151.0 billion), one fifth of personal consumption expenditure ($130.2 billion), and 30 percent of all services spending ($85.5 billion).

Hospital Ownership of Physicians Drives Up Costs

New research published in the JAMA Internal Medicine journal supports, with rigorous data analysis, that hospital ownership of medical practices drives up costs:

Among the 240 Metropolitan Statistical Areas, physician-hospital integration increased from 2008 to 2012 by a mean of 3.3 percentage points, with considerable variation in increases across MSAs. For our study sample of 7,391,335 nonelderly enrollees, an increase in physician-hospital integration equivalent to the 75th percentile of changes experienced by MSAs was associated with a mean increase of $75 per enrollee in annual outpatient spending from 2008 to 2012, a 3.1% increase relative to mean outpatient spending in 2012). This increase in outpatient spending was driven almost entirely by price increases because associated changes in utilization were minimal (corresponding change in price-standardized spending, $14). Changes in physician-hospital integration were not associated with significant changes in inpatient spending ($22 per enrollee) or utilization ($10 per enrollee).

(Note: I have edited out the measures of statistical significance from the abstract, for ease of reading.)

CPI: Medical Prices Rose Three Times Faster Than Other Prices; Hospitals Stand Out

BLSOctober’s Consumer Price Index (CPI) confirms medical prices continue to spring ahead of prices for other goods and services. Overall CPI increased 0.2 percent on the month and also 0.2 percent, year on year. Medical prices, on the other hand, increased 0.7 percent on the month and 3.0 percent, year on year (Table I).

20151117 CPI

PPI: Health Prices Continue to Rise Faster Than Others

October’s Producer Price Index declined 0.4 percent, month on month, and dropped 1.6 percent, year on year. Mild deflation continues to take hold in the general economy. However, it is not so in health care. Of the 14 sub-indices for health-related goods and services, only three declined month on month. Only six declined year on year (see Table I).

20151113 PPIa

Health Jobs Dominate Great Jobs Report

BLSObservers cheered the October Employment Situation Summary, which reported 271,000 civilian nonfarm jobs added. This is a big turnaround from the September report, which was very disappointing. Nevertheless, the two months have one thing in common: Jobs in health services dominated the growth in jobs. Whether job growth overall is strong or weak, health care keeps increasing its share.

Health care accounted for 45,000 of the 217,000 jobs added overall in October (Table I). That’s a rate of growth of 0.29 percent, much higher than 0.18 percent growth in non-health jobs. Jobs in ambulatory facilities accounted for 27,000 of the increase, which hospital jobs only increased by 18,000. Ambulatory jobs now account for a significantly higher share of health jobs than hospitals do. This change is positive, because hospitals are inefficient and overly expensive facilities for many procedures.

20151105 Health Workforce TI

Yet Another and then Another Health Insurance CO-OP Bites the Dust

Last Summer I wrote, “Consumer Operated and Oriented Plans… are slipping into insolvency.” Last week I wrote, “Obamacare health insurance cooperatives are falling by the wayside like drunken ice skaters on a frozen pond.” The pace of failure is accelerating!

The latest two failures are the CO-OPs in Utah and South Carolina. In the past week, Consumers’ Choice Health Insurance Company in South Carolina and Utah’s Arches Health Plan are the latest CO-OPs to announce they will close. CO-OPs in New York, Nevada, Tennessee, Louisiana, Colorado, Iowa, Oregon and Kentucky have either closed or announced they were not continuing into 2016.

Health Services Accounts for One Fifth of Weak Q3 GDP Growth

BEAToday’s advance estimate of Gross Domestic Product for the third quarter indicates growth in health spending is maintaining a disproportionate share of weak GDP growth. Commenters noted that the weak estimate was largely due to shrinking inventories. This explains why personal consumption expenditure (PCE) growth ($135.7 billion) was actually higher than GDP growth ($121.1 billion), quarter on quarter (Table I).

20151029 GDP T

CPI: Deflation Except In Health Care (Again)

I admitBLS this is getting a little repetitive, but it is not my fault the Bureau of Labor Statistics (BLS) releases the Consumer Price Index one day after the Producer Price Index. The CPI confirms (once again) the price behavior indicated by yesterday’s PPI.

While consumer prices were down 0.2 percent, month on month, and flat year on year, medical prices increased 0.2 percent and 2.5 percent (Table I). However, prescription drugs experienced quite moderate price increases last month. This means that while prices of medical goods and services overall increased, month on month, there was no sticker shock versus the CPI. Unfortunately, yesterday’s PPI suggests that price increases are flowing through the system again, and we can expect to see a pick-up in health prices versus overall inflation, in future CPIs.

PPI: Deflation Except in Health Care

BLSSeptember’s Producer Price Index declined 0.5 percent, month on month, and dropped 1.1 percent, year on year. A mild deflation appears to be taking hold in the general economy. However, it is not so in health care. Of the 14 sub-indices for health-related goods and services, only five declined month on month. Only three declined year on year (see Table I).

20151014 PPI

Castlight Health: Pricing for Medical Services Is All Over The Map

CastlightCastlight Health has published its second annual U.S. Costliest Cities Analysis, which shows astonishing variation for prices of medical procedures. This year’s report focuses on women’s preventive health:

Mammogram. Nationwide for a mammogram, a woman could pay anywhere from $43 to $1,898 for the test, a 44x difference. With some of the country’s largest cities, the clear indication is that women in larger metropolitan areas are being charged wildly varying amounts for a critical preventative test. For example:

  • In Dallas, which has the nation’s widest range, a woman could pay anywhere from $50 to $1045, roughly a 21x difference.
  • In New York City, the price can vary between $130 to $1,898, roughly a 15x difference. New York also has the most expensive mammograms in the entire country.
  • In Los Angeles, a simple mammogram could cost anywhere from $86 to $954, an 11x price variance.
  • The San Francisco Bay Area ranged from $129 to $860, a 6x difference.

OB/GYN Follow-Up Visit. Minneapolis and Seattle were the most expensive cities for an OB/GYN follow-up visit, and Phoenix and Las Vegas were the cheapest.

Preventative Gynecological Exam. The San Francisco Bay Area was the priciest for both a preventative gynecological exam and an HPV test, where it was on average 6x more expensive than Charlotte, NC for both.

HPV Test. In Philadelphia, the price of an HPV test ranged from $32 to $626, a 19x difference.