Healthcare Spending Slows, but Prescription Drugs Remain Top Driver of Growth

In the second quarter of 2015 the healthcare spending growth rate was 5.9%, a decline from 6.6% in the first quarter of the year, according to a report from Altarum Institute. According to the data, the health spending growth rate is still 2 percentage points higher than rates experienced between 2009 and 2013. The institute estimates the difference is due to expanded coverage and the "abnormally high growth in spending on prescription drugs."

The report surmises that expanded coverage under the Affordable Care Act, and the subsequent drop in the uninsured rate, has added approximately 1.4 percentage points to the health spending growth rate in the second quarter of 2015. Meanwhile, high growth in prescription drug spending added nearly 0.6 percentage points to the overal health spending growth.

"While the slowdown in coverage expansion is fairly easy to predict, the future trend in prescription drug spending is far less certain, with several expensive specialty drugs anticipated to come to market shortly," Katherine Hempstead, PhD, MA, director and senior program officer at the Robert Wood Johnson Foundation, pointed out in a blog post.

During the first half of 2015, spending on prescription drugs has grown at an annual rate of 10%. In comparison, from 2009 to 2013, the average growth rate was only slightly more than 2%, according to Altarum.

Price growth for healthcare services, in contrast, remains very low at 0.9% year over year. Private payers are experiencing higher growth than Medicare, which was flat, and Medicaid, which was actually negative.

“June health care prices across all services are down for Medicare and Medicaid but up for private payers,” Charles Roehrig, director of the Altarum Institute Center for Sustainable Health Spending, said in a statement. “This new Bureau of Labor Statistics price index tells us that the already large gap between what private and public insurers pay for the identical service is getting larger. This has obvious potential implications for patients and providers and we plan to track it closely.”