August 2021 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 August 2021 briefs.

National health spending continues its gradual recovery

• National health spending in June 2021 was 7.7% higher than in June 2020, reflecting the continued recovery from the effects of the COVID-19 pandemic.
• Since January 2020, before the pandemic-induced drop began, net growth in national health spending was 1.7% through June 2021.
• Health spending has grown more slowly than gross domestic product (GDP) in recent months and now stands at 17.4% of GDP; it was 18.0% in January and February 2020.
• The magnitude of the drop and subsequent recovery in health spending continues to vary by category of spending, with prescription drug spending showing the greatest growth since January 2020, at 4.0%, while spending on dental services remains behind the other categories, at -10.8%.

Health sector price inflation remains mostly under control

• Growth in the overall Health Care Price Index (HCPI) remained steady again in July, with prices 1.9% higher than they were a year ago, compared to the 2.0% growth rate seen in June, marking the fourth straight month of health care price increases at or below 2.0%.
• Among the major sectors, physician services and hospital prices continue to be the two fastest growing major categories, increasing 3.2% and 2.9% year over year respectively, while prescription drug prices remain the sole major category with decreasing prices in July. Prescription drug prices fell by -2.5% compared to a year prior, extending the now ten-month streak of negative growth.
• Year-over-year growth in an implicit measure of health care utilization (spending growth minus changes in prices) remains high, at 6.8% as of June, mostly due to lower spending in the comparison month last year.  
• Outside of health care, economywide price growth, as measured by both the consumer price index (CPI) and producer price index (PPI), continued to accelerate, with those measures increasing to 5.4% and 7.8% in July.

Hospital and ambulatory care jobs grow while residential care jobs continue decline

• Health care added 36,800 jobs in July, with gains in ambulatory care (+31,900 jobs) and hospitals (+18,300 jobs) offsetting losses in nursing and residential care (-13,400 jobs). Revisions through June were minimal.
• As of July 2021, health care employment is 501,600 jobs, or 3.0%, below the February 2020 pre-pandemic peak. Three-quarters of this decline in employment is in nursing and residential care settings, which are down 378,000 jobs, or 11.2% since February 2020.
• Employment in dental offices, medical labs, and outpatient care centers has surpassed pre-pandemic levels, while overall ambulatory care settings remain just 37,500 jobs, or 0.5%, below the level of February 2020.
• Hospitals added 18,300 jobs in July to stand at 86,000 jobs, or 1.6%, below the level of February 2020.
• Residential care employment is down by 378,000 jobs (-11.2%) from the level of February 2020, with 215,000 fewer jobs (-13.5%) in nursing homes and 163,000 fewer (-9.1%) in other residential care.
• The economy added a strong 943,000 jobs in July, for a total of 4.3 million jobs added in 2021. Total employment remains 5.7 million, or 3.7% below pre-pandemic levels. The unemployment rate fell to 5.4%.