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Spending on hospital care soars in February

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U.S. health expenditures in February climbed 6.6% compared with the same month last year. A sharp rise in hospital spending was among the primary catalysts.

Spending on hospital care grew by 9% in the 12 months ended in February, according to the Altarum Institute's Center for Sustainable Health Spending. That was a sharp divergence from same period a year ago, when hospital spending increased 3.1%.

The 9% jump was also more pronounced than what Altarum recorded from January 2014 to January 2015. In that 12-month span, hospital spending increased 6.1%.

The growth in hospital spending is “particularly significant,” Altarum economists wrote, because hospital care represents roughly one-third of all health spending. But the causes behind the sizable rise are unclear.

More people continue to buy health plans under the Affordable Care Act, and economists have said more insurance coverage could lead to more utilization. The hospital sector continues to add jobs, as well, indicating consistent demand.

“While data for 2015 are preliminary, the spending increase, especially in the hospital sector, does align with hospital job growth,” Charles Roehrig, director of Altarum's Center for Sustainable Health Spending, said in a news release.

Spending on prescription drugs also maintained a sustained march upward, increasing 10.5% between February 2014 and February 2015. Drug expenses, which account for about 10% of all U.S. health spending, went up considerably in the past year as pricey specialty treatments such as Harvoni and Sovaldi hit the market.

Health insurance overhead surged 9.6% year over year in February. Money spent on doctors and other clinicians, however, increased at a lower 3.2% rate.

The latest Altarum report is another indicator healthcare spending is back on the rise after several years of historically low growth. However, a new report from the Urban Institute contradicts the Altarum analysis and predicts “slower growth” in health spending from 2014 to 2016 before it picks back up in 2017 and beyond. The liberal-leaning think tank attributes part of the restrained growth to the Affordable Care Act.

Bob Herman writes for Modern Healthcare, a sister publication of Business Insurance.