February 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 February 2022 briefs.

Including federal government support, health spending grew by 3.4% in 2021 

• National health spending for all of 2021 grew by 3.4%, reflecting significant federal government support in response to the COVID-induced recession in 2020 and a lower level of such support in 2021. Taking these support dollars out of both 2020 and 2021 estimates, spending growth from 2020 to 2021 would have been 8.4%, as the economy continued to recover.
• With the increased federal government assistance, health spending fell below January 2020 levels only in March 2020. Without this assistance, spending would have remained below January 2020 levels throughout most of 2020 and through February 2021.
• Including the federal support, health spending in December 2021 represented 18.8% of GDP; it was 17.8% of GDP if the additional government expenditures are excluded. For all of 2021, health spending represented 18.5% of GDP with the support and would have been 18.1% without it.

A jump in prices paid by private insurance is offset by a Medicare price slowdown

• Overall Health Care Price Index (HCPI) growth remained the same as the month prior, at 2.4% in January, staying within its tight range near 2.0% year-over-year growth, the trend seen since April 2021.
• Health care price growth remains lower than expected given rapid increases in economywide inflation—January CPI growth was 7.5% and PPI growth was 9.7%, each a near series-record rate.
• Prices paid by private insurance for health care services increased somewhat in January to 3.2% year-over-year, while Medicare and Medicaid price growth was significantly slower, at 1.1% and 1.6% respectively.
• Hospital care prices were the fastest growing major category, at 2.9% year over year, while prescription drug prices increased 1.3% after a long period of zero and negative price growth throughout 2021.
• Our estimate of implicit utilization (spending growth minus changes in prices) shows overall health sector utilization increased by 8.2% in December 2021, with a twelve-month average increase of 2.6%.  

2022 begins with modest health employment growth following a familiar pattern 

• Health care employment grew modestly in January 2022, adding 18,000 jobs. As we saw through 2021, most of the growth was in ambulatory care settings, which added 14,700 jobs, while hospitals added 3,400 jobs and nursing and residential care settings were flat (-100 jobs).
• The annual benchmark revisions to the BLS Current Employment Statistics survey, the source of most of the figures in this brief, did not substantially change the story of recovery from the pandemic-induced drop in employment that has varied by setting of care. Revisions added 52,000 jobs to the health employment total, which remains 378,000 jobs, or 2.3% below the level of February 2020, the pre-pandemic peak. 
• By setting, revisions added 56,000 jobs to the estimate of ambulatory care employment, now at 1.7% above the pre-pandemic level. Revisions lowered the hospital employment estimate by 14,000 jobs; this setting remains 2% below the pre-pandemic peak. Finally, revisions added 9,500 jobs to nursing and residential care employment, but these settings are still down 409,000 jobs, or 12.1% since February 2020.
• The economy added 449,000 jobs in January 2022, surpassing consensus expectations. About 93% of the 20.5 million-job drop in employment seen early in the pandemic has been regained, with a remaining deficit of 2.87 million jobs compared to February 2020. The unemployment rate ticked up slightly to 4.0%.