December 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 December 2021 briefs.

New CMS data show near-record national health spending growth due to COVID-related federal expenditures

• New data from CMS indicate national health spending grew by 9.7% in 2020, the fastest rate since 2002, driven primarily by increases in federal government spending in response to the COVID-19 pandemic.
• Gross Domestic Product (GDP) fell by 2.2% in 2020, resulting in a health spending share of GDP of 19.7% for the year.
• Excluding these additional government expenditures, national health spending grew by 1.9%.
• Incorporating similar increases in government spending into our spending estimates for 2021 suggests that health spending in October 2021 grew by 4.4% since October 2020 and currently represents 19.5% of GDP.
• We dive deeper in our accompanying blog, where we assess the overall impact of federal health care system support on the 2020 health spending estimates, decompose the total government support across different health sectors, and estimate the distribution of 2020 health spending by month with and without the federal government assistance.

Health care price growth picks up slightly but stays below economywide inflation

• The overall Health Care Price Index (HCPI) increased by 2.3% year over year in November, a slightly faster rate than the month prior and the fastest growth seen since March 2021.
• Yet, health care price growth remains moderate and lower than expected given rapid increases in economywide inflation, as measured by both the consumer price index (CPI) and producer price index (PPI), each of which set a record in our series at 6.8% and 9.6%, respectively, in November.
• Physician and clinical services price growth remains fastest among underlying healthcare components, at 3.6% in November, followed closely by hospital services price growth at 2.5%. Retail prescription drug prices were the only major component to decline in November, falling -0.3% year over year.
• Our series measuring implicit utilization (spending growth minus changes in prices) was revised this month as CMS released new official estimates of 2020 health care spending, and now shows overall health sector utilization increasing by 3.7% in November alongside hospital utilization rising by 4.7%.  

Growth in ambulatory care jobs offset by declines in hospitals and residential care 

• Health care employment was flat in November (+2,100 jobs), with gains in ambulatory care settings (+17,000 jobs) offsetting drops in hospitals (-3,900 jobs) and nursing and residential care (-11,000 jobs).
• November data are consistent with the pattern of health employment in 2021. The 62,000 health jobs added from January through November 2021 reflect solid job growth in ambulatory care settings (+240,000), offset by a modest decline in hospital jobs (-29,000) and a substantial decline in nursing and residential care jobs (-149,000).
• Compared to pre-pandemic, employment in ambulatory care settings has rebounded and is now 0.8% above where it was in February 2020. Hospital employment remains 92,000 jobs, or -1.7%, below the February 2020 level. Nursing and residential care employment has fallen steadily throughout the pandemic and is now 424,000 jobs (12.5%) below the level of February 2020, with declines in both nursing homes (down 238,000 jobs, or 15%) and other residential care facilities (down 186,000 jobs, or 10.4%).
• The economy added 210,000 jobs in November and revisions added another 82,000 jobs. 6.1 million jobs have been added in 2021 – still 3.9 million below the February 2020 level. Unemployment dropped to 4.2%.