July 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 July 2021 briefs.

In 2021, GDP growth is outpacing national health spending growth

• National health spending in May 2021 was 15.7% higher than in May 2020, reflecting the continued recovery from the effects of the COVID-19 pandemic.
• Since January 2020, before the pandemic-induced drop began, net growth in national health spending was 1.4% through May 2021.
• Health spending has grown more slowly than gross domestic product (GDP) in recent months and now stands at 17.5% of GDP; it was 17.9% in January 2020.
• The magnitude of the drop and subsequent recovery in health spending has varied by category of spending, with prescription drug spending showing the greatest growth since January 2020, at 1.7%, while spending on dental services continues to lag other categories, at -12.3%.

Health sector price growth falls below 2.0% amid economywide records

• Growth in the overall Health Care Price Index (HCPI) remained steady again in June, with prices 1.9% higher than they were a year ago, compared to the 2.0% growth rate seen in May.
• This moderation in health price growth was driven by a slight slowing in hospital, prescription drug, dental, home health, and other professional care prices, each of which increased more slowly in June compared to the prior month.
• Physician services and hospital prices continue to be the two fastest growing major categories, increasing 3.3% and 2.9% year over year respectively, while prescription drug prices remain the sole major category with decreasing prices in June. Prescription drug prices fell by -2.5% compared to year prior, extending the now nine-month streak of negative growth.
• Outside of health care, economywide price growth, as measured by both the consumer price index (CPI) and producer price index (PPI), continued to accelerate, with those measures increasing to 5.4% and 7.3% in June. This is the fastest growth for economywide CPI since 2008 and the fastest ever in the series for PPI.

Halfway through 2021, health employment stands 25K below December 2020

• Health care employment fell by 12,000 jobs in June. Revisions through May lowered health employment by another 17,500 jobs. As of June 2021, health care employment is down 25,000 jobs compared to the end of 2020 and 537,000 jobs compared to the Feb 2020 pre-pandemic peak (-3.3%). 
• Ambulatory care settings added 2,900 jobs in June. Employment in dental offices, medical labs, and outpatient care centers is back above pre-pandemic levels but ambulatory care employment overall remains 75,400 jobs below the level of Feb 2020 (-1%).
• Hospitals dropped 5,500 jobs, back to the level of employment seen in November 2020, and remaining 102,000 below Feb 2020 (-1.9%).
• Nursing and residential care dropped 9,600 jobs (-3,600 in nursing homes and -6,000 in other residential). Residential care employment is down by 360,000 jobs (-10.7%) from the level of Feb 2020, with about two/thirds of the employment drop seen in nursing homes and about one-third in other residential care.
• The economy added a robust 850,000 jobs. With large gains overall and a decline in health care employment, the health share of employment (10.95%) fell below 11% for the first time since March 2020.