January 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—helping to fill gaps in the official government data. Below are highlights from the January 2021 briefs:

National health spending recovery shows signs of stalling

• At $3.90 trillion (seasonally adjusted annual rate), national health spending in November 2020 was 0.8% higher than in November 2019.
• The November 2020 nominal gross domestic product (GDP) was 1.5% lower than in November 2019, and the resulting health-spending share of GDP was 18.2%, and 17.6% of potential GDP (PGDP).
• Spending in November 2020, year over year, declined in some major categories and grew in others. The greatest decline was in spending on dental services, at -13.6%. The greatest increase was in home health care, which grew by 5.9%. The recovery in spending from its drop in March and April appears to be leveling off. 

Health care services price growth outpaces products for December

• Overall US health care price growth continued to moderate in the month of December, falling to a year over year rate of 1.8%, compared to 2.0% from the prior month. While steadily slowing in the second half of 2020, total 2020 health care price growth for the year ended above the average rate of growth since 2010.
• Hospital and nursing home care prices continue to lead the major categories at 3.7% and 3.6% growth respectively. Physician services price growth slowed slightly from the prior month to 0.9% and prescription drug price growth was again negative at -2.4%, the biggest decline since the start of our series.
• Continuing the trend from the prior month, the gap in overall price growth between payers shrunk again in December. The year over year rates for the three major payers (private insurance, Medicare, and Medicaid) are now within 0.6 percentage points of each other. 
• Our implied measure of health care utilization (spending growth net of price growth), remained negative in November and continues to find, for the major categories, price growth trending opposite of utilization.

Health care ends 2020 with a smaller workforce, down 2.6% from a year ago

• Health care added 39,000 jobs in December to end the year at just over 16 million jobs; however, this figure represents a year-over-year decline of 433,000 jobs, or 2.6%, compared to December 2019.
• Compared to peak pre-COVID-19 employment (February 2020), the health care workforce is 3%, or half a million jobs, smaller as of the end of 2020.
• Hospitals reported a boost in employment in December, adding 32,000 jobs to stand at 1.3% below peak pre-COVID-19 employment. Employment in ambulatory care settings remains about 2% below the February peak. 
• Nursing and residential care employment saw another month of decline, closing the year down 262,000 jobs compared to February, a 7.8% decline. Nursing homes alone lost 153,000 jobs over the course of 2020, nearly 10% of the workforce.
• The economy overall lost 140,000 jobs in December, the first loss since April. The year 2020 closed with 9.8 million fewer jobs than at the peak of employment in February. The unemployment rate remained at 6.7%.