April 2022 Health Sector Economic Indicators Briefs

Altarum's monthly Health Sector Economic Indicators (HSEI) briefs analyze the most recent data available on health sector spending, prices, employment, and utilization. Support for this work is provided by a grant from the Robert Wood Johnson Foundation. Below are highlights from the April 2022 briefs.

CMS projections show health spending grew by 4.2% in 2021

• National health spending in 2021 grew by 4.2%, year over year, according to new data released by CMS.
• This was significantly smaller than the 9.7% growth experienced in 2020 because of a decline in supplemental funding from the federal government.
• Absent this supplemental funding in both years, spending growth would have been 1.9% in 2020 and 8.1% in 2021.
• For the month of February 2022, year-over-year health spending growth was 4.9%, higher than the 2021 growth rate but significantly smaller than GDP growth of 12.5%.

Health care price and utilization growth remain low in March

• The overall Health Care Price Index (HCPI) increased slightly in March, rising 2.3% year over year, and increasing slightly from the 2.2% growth rate a month prior.
• This health care price growth remains much lower than very high economywide inflation, which continues to increase—March CPI growth was 8.5% and PPI growth was 11.2%, both faster than a month before.
• Among major health care categories, physician services and nursing home prices increased the least in March (0.6% and 1.4% year over year respectively), while hospital services and prescription drug prices grew by 2.2%.
• Growth in prices paid by private insurance for health care services remained greater than public payer growth in March at 3.0% year over year versus Medicare and Medicaid price growth, at 1.1% and 2.0% respectively.
• Our estimate of implicit utilization (spending growth minus changes in prices) shows overall health sector utilization increased by 3.2% year over year in February 2022, with a twelve-month average increase of 2.9%.

 After strong growth in February, health care hiring slows again in March 2022

• After a gain of 66,000 jobs in February, health care employment grew by a modest 8,300 jobs in March 2022, with gains of 7,200 jobs in ambulatory care settings and 5,100 jobs in hospitals partially offset by the loss of 4,000 jobs in nursing and residential care.
• More than two years since the start of the pandemic, the level of health employment is 298,000 jobs (1.8%) below the pre-pandemic peak while distribution of jobs has shifted from inpatient and residential settings to ambulatory settings. Employment in ambulatory care settings is now 206,000 jobs (2.6%) above where it was in February 2020, while hospital employment remains 98,000 jobs (1.9%) below the level of February 2020 and nursing and residential care employment is down by nearly 406,000 jobs (12% decline).
• The economy added 413,000 jobs in March and revisions added another 95,000 jobs. Through the first quarter of 2022, the economy added an average of 562,000 jobs per month, matching the pace of 2021. Total employment is now 1.6 million jobs, or 1%, below the pre-pandemic peak, while the unemployment rate dropped again to 3.6%, very close to the pre-pandemic low of 3.5%.
• Wage data are consistent with a tight labor market overall and in health care in particular. Average hourly earnings in health care grew 6.8% year over year in February 2022 (the most recent data point). Earnings across all private sector jobs grew 5.2% year over year in February and 5.6% in March 2022.