December 2019 Health Sector Economic Indicators Briefs

​These monthly briefs analyze the most recent data available on health sector employment, spending, prices, and utilization—helping to fill gaps in the official government data.

Below are highlights from the December 2019 briefs: 

Spending: New CMS data indicate national health spending grew by 4.6% in 2018; will accelerating spending in 2019 and lower GDP growth push up the health care share of the economy?

• New data from the Centers for Medicare and Medicaid Services (CMS) indicate that national health spending as measured by the National Health Expenditure Accounts (NHEA) grew by 4.6% in 2018. Small downward revisions occurred despite an upward revision to 12.0% in growth of the net cost of health insurance resulting from the health insurance tax and insurer profitability. Our estimate of national health spending growth for the first 10 months of 2019 is 4.9%, year over year. This acceleration is primarily due to growth in hospital spending. Despite this recent acceleration, health spending remains below 18% of GDP, largely because of strong GDP growth that may now be fading.
• At $3.89 trillion (seasonally adjusted annual rate), national health spending in October 2019 was 5.3% higher than in October 2018. (Note that while laypersons often say that U.S. health care spending is 3 trillion dollars, it is now much closer to $4T than 3!)
• Spending in October 2019, year over year, increased in all major categories. Spending on prescription drugs grew the fastest, at 8.0%. Growth in spending on home health care was the slowest, at 0.8%.

Labor: November rebound in health care hiring is consistent with strong growth year—are employers becoming complacent believing that current good times won’t end?

• After a slow October, health care added a strong 45,200 jobs in November, considerably more than the 12-month average of 34,500.
• While hospitals added a solid 9,900 jobs, most of the growth was in ambulatory care, which added 33,900 jobs; With initial data now in through November, we expect 2019 will be as strong a year as the post-expanded coverage years of 2015 and 2016, both in numbers of new jobs and percentage growth.
• Year over year (November 2019 compared to November 2018), health jobs grew by 2.6% (the highest rate since the 2.7% reached in fall 2015), double the rate of non-health jobs at 1.3%. The health share of total jobs is at 10.87%, the current all-time high; Health care has added more than 350,000 jobs from January through November 2019.

Prices: Health care price growth decelerates due to hospital prices; Rx prices barely rise (second positive annual growth rate after four negative months).

• Health care prices in November 2019 rose 1.8% from November 2018, cooling from the high October annual rate of 2.1%.
• Year-over-year hospital price growth was 2.4%, also down from its high October rate of 2.8%. Annual physician price growth remained at 0.6%. Annual drug price growth was 0.5 in November, down from 1.0% in October, and the second positive annual reading since April 2019.
• The historically long streak of 26 months whereby health care prices grew slower than economy-wide prices appears to have ended with the September data. This means a reversion to the historical norm and would once again imply that health care price growth is contributing to higher economy-wide price growth.
• Implicit per capital health care utilization (personal health care spending minus pure prices per person) is increasing in 2019 compared to 2019.