January 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 January 2022 briefs.

Health spending growth since the start of the pandemic reflects significant federal government support

• National health spending in November 2021 was 4.2% higher than in November 2020.
• Since January 2020, before the pandemic-induced drop began, net growth in national health spending was 17.8% through November 2021, including the impact of significant federal government support in response to the pandemic.
• Excluding these additional government expenditures, national health spending grew by 6.7% since January 2020.
• Including the federal support, health spending in November 2021 represented 19.6% of GDP; it was 17.8% of GDP if the additional government expenditures are excluded.

Health care price growth picks up but remains well below economywide inflation  

• The overall Health Care Price Index (HCPI) increased by 2.3% year over year in December, a slightly faster rate than November (2.2%), which was revised downward by 0.1% in this month’s data.
• Since April 2021 overall health care price growth has remained in a very tight range, hovering around 2.0% year over year.
• Health care price growth remains lower than expected given rapid increases in economywide inflation—December CPI growth was 7.0% and PPI growth was 9.7%, each near record rates.
• Physician and clinical services and hospital care price growth remain the fastest growing major categories, at 4.1% and 2.4% respectively, and within those categories, prices paid by private insurance increased moderately in December.
• Our estimate of implicit utilization (spending growth minus changes in prices) shows overall health sector utilization increased by only 3.3% in November, slowing somewhat from the month prior.

Health care employment grew little in 2021 and only in ambulatory care settings      

• Health care employment fell slightly (-3,100 jobs) in December 2021, with gains in ambulatory care settings (+8,100 jobs) offsetting drops in hospitals (-5,100 jobs) and nursing and residential care (-6,100 jobs).
• Based on the initial estimates for December, health care employment increased only slightly in calendar year 2021, ending up 0.4%, or 63,000 jobs compared to December 2020. This modest growth reflects solid job growth in ambulatory care settings (+242,000), offset by a modest decline in hospital jobs (-33,000) and a substantial decline in nursing and residential care jobs (-146,000).
• Compared to pre-pandemic, employment in ambulatory care settings is now 0.8% above where it was in February 2020. Hospital employment remains 92,000 jobs, or 1.8% below the February 2020 level. Nursing and residential care employment has fallen steadily throughout the pandemic and is now 424,000 jobs (12.4%) 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 199,000 jobs in December and revisions added another 141,000 jobs. With more than 6.4 million jobs added in 2021, total nonfarm employment ends the year 3.1 million jobs below the February 2020 level. The unemployment rate dropped for the sixth straight month to 3.9%.