Tag: "economic data"

Health Prices Up Two Thirds Less Than CPI

blsThe Consumer Price Index rose 0.6 percent in December, while medical prices rose only 0.2 percent. This is the fifth month in a row we have enjoyed medical price relief in the CPI. Even prices of prescription drugs rose by only 0.3 percent. Prices of three components – medical equipment and supplies, dental services, and care of invalids and elderly at home even dropped. No category rose more than 0.1 percentage point more than all item CPI. Medical price inflation contributed only three percent of CPI for all items.

Over the last 12 months, however, medical prices have increased much more than non-medical prices: 3.9 percent versus 2.4 percent. Price changes for medical care contributed 13 percent of the overall increase in CPI.

See Figure I and Table I below the fold:

PPI: Health Prices Mixed Amidst Inflation

blsJanuary’s Producer Price Index rose 0.6 percent. However, prices for many health goods and services grew slowly, if at all. Nine of the 16 price indices for health goods and services grew slower than their benchmarks.* Prices for six of the categories of health goods and services deflated in absolute terms.

The outlier was pharmaceutical preparations for final demand, which increased by 1.1 percent (0.7 percentage points more than final demand services (less trade, transportation, and warehousing.) The largest decline (relative to its benchmark) was for prices of health and medical insurance for intermediate demand, which declined by 0.8 percentage points versus services for intermediate demand (less trade, transportation, and warehousing).

With respect to diagnosing whether health prices are under control, the January PPI is more mixed than December’s was. Nevertheless, although pharmaceutical prices stand out, most excess inflation is in health services, not goods.

See Table I below the fold:

Slow Growth, Downward Revision in Health Jobs

blsLast month’s job report showed an explosion in health jobs versus non-health jobs. Revisions to previous data in this morning’s very strong jobs report indicate those data were not correct.

Health jobs increased only 0.12 percent in this morning’s jobs report, versus 0.16 percent for non-health jobs. With 18,000 jobs added, health services accounted for only eight percent of new nonfarm civilian jobs.

This is a welcome development. The previous disproportionately high share of job growth in health services was a deliberate outcome of Obamacare. If this trend persists, it will become increasingly hard to carry out reforms that will improve productivity in the delivery of care.

Ambulatory sites added jobs at a much faster rate than hospitals (0.41 percent versus 0.21 percent). This was concentrated in outpatient care centers and home health. This is a good sign because these are low-cost locations of care.

See Table I below the fold:

Health Construction Picked Up in December

Census2Health facilities construction turned around in December, growing 0.6 percent versus a decline of 0.3 percent in starts for other construction. Health facilities construction accounted for almost 6 percent of non-residential construction starts. However, the growth was all in private health facilities.

Construction of private health facilities grew 1.2 percent, versus an increase of 0.2 percent for private non-health facilities. Private health facilities construction starts accounted for less than 4 percent of private nonresidential construction starts. Construction of public health facilities dropped by 1.5 percent. However, construction of other public facilities dropped by even more, 1.8 percent. In other words, health facilities construction outpaced non-health construction by 1.0 percentage points in the private construction market, versus only 0.3 percentage points in the public construction market (Table I).

GDP: Tame Health Spending In Weak Report

BEAFor those (like me) concerned about how much health spending continues to increase after Obamacare, today’s flash report of fourth quarter Gross Domestic Product confirmed good news.

Overall, real GPD increased 1.9 percent on the quarter, while health services spending increased only 1.6 percent, and contributed only 10 percent of real GDP growth. Growth in health services spending was somewhat higher than growth in non-health services spending (1.2 percent) but significantly lower than non-health personal consumption expenditures (2.7 percent). Further, the implied annualized change in the health services price index increased by just 1.5 percent, lower than the price increase of 2.4 percent for non-health services, 2.3 percent for non-health PCE, and 2.2 percent for non-health GDP.

(See Table I below the fold.)

CPI: Moderate Health Price Increases

blsThe Consumer Price Index rose 0.3 percent in December. Medical prices rose only 0.2 percent. This is the fourth month in a row we have enjoyed medical price relief. Even prices of prescription drugs rose by only 0.2 percent. Prices of health insurance even dropped a smidgeon!

Prices for medical care commodities rose the most, by 0.6 percent, followed closely hospital services (0.3) percent).

Over the last 12 months, however, medical prices have increased over twice as fast as non-medical prices: 1.9 percent versus 4.1 percent. Price changes for medical care contributed 16 percent of the overall increase in CPI.

Many observers of medical prices decline to differentiate between nominal and real inflation. Because CPI is has been low until recently, even relatively moderate nominal price hikes for medical care are actually substantial real price hikes. More than six years after the Affordable Care Act was passed, consumers have not seen relief from high medical prices, which have increased over twice as much as the CPI less medical care since March 2010, the month President Obama signed the law.

(See Figure I and Table I below the fold.)

PPI: Pharma Prices Are Dropping!

BLSDecember’s Producer Price Index rose 0.3 percent. However, prices for most health goods and services grew slowly, if at all. Fifteen of the 16 price indices for health goods and services grew slower than their benchmarks.*

The outlier was health and medical insurance for final demand, which increased by 0.2 percent, the same rate as final demand services (less trade, transportation, and warehousing.) The largest decline (relative to its benchmark) was for prices of new health care building construction, which declined twice as fast as prices of overall building construction did.

Prices of hospital outpatient care and nursing home care declined versus their final demand services (less trade, transportation, and warehousing) and also absolutely. Pharmaceutical prices decreased 0.1 percent, a 0.4 percent drop versus the price increase for final demand goods less food and energy.

See Table I below the fold:

Health Jobs Explode Versus Non-Health Jobs

blsHealth jobs exploded in this morning’s jobs report, growing more than three times faster than non-health jobs (0.28 percent versus 0.09 percent). With 43,000 jobs added, health services accounted for over one quarter of 156,000 new nonfarm civilian jobs.

The disproportionately high share of job growth in health services is a deliberate outcome of Obamacare. While this trend persists, it will become increasingly hard to carry out reforms that will improve productivity in the delivery of care.

Ambulatory sites added jobs at a much faster rate than hospitals (0.41 percent versus 0.21 percent). This was concentrated in offices of physicians, which alone added. Ambulatory sites added 30,000 jobs, versus 11,000 in hospitals. This is a good sign because hospitals are high-cost locations of care versus doctors’ offices and other ambulatory sites.

See Table I below the fold:

Drop in Health Facilities Construction Continues in November

Census2October’s construction trend continued in November. Overall, health facilities construction starts declined 0.1 percent, versus an increase of 0.9 percent for other construction. Health facilities construction accounted for almost 6 percent of non-residential construction starts. However, there was greater gap between health and non-health starts in private than public construction.

Construction of private health facilities dropped 0.2 percent, versus an increase of 1.0 percent for private non-health facilities. Private health facilities construction starts accounted for less than 4 percent of private nonresidential construction starts. Construction of public health facilities increased by 0.4 percent, while construction of public non-health facilities increased 0.8 percent. In other words, non-health facilities construction outpaced health construction by 1.2 percentage points in the private construction market, versus only 0.4 percentage points in the public construction market.

For the twelve months ending last October, there was a significant difference in trend between private and public construction. Non-health private construction increased 4.3 percent, but private health facilities construction dropped 1.5 percent. On the other hand, non-health facilities public construction increased 2.6 percent, while public health facilities construction increased by 2.9 percent.

This suggests private investors are nervous about future revenue growth in hospitals and other facilities.

See Table I below the fold:

GDP: Health Spending Almost Flat

BEAFor those (like me) concerned about how much health spending continues to increase after Obamacare, the third report of third quarter Gross Domestic Product confirmed good news. Although GDP growth was revised up $14.5 billion from the second report, spending on health services was revised downward. It is good to have a breather from the second quarter, which was dominated by growth in health services spending.

Overall, real GPD increased 3.5 percent on the quarter, while health services spending increased only 0.6 percent, and contributed only 2 percent of real GDP growth. Growth in health services spending was also significantly lower than other services spending and personal consumption expenditures (PCE). However, the annualized change in the health services price index increased by 1.8 percent, lower than the price increase of 2.8 percent in non-health services, slightly more than the 1.4 percent price increase in non-health PCE, and non-health GDP.

(See Table I below the fold.)