June 2019 Health Sector Economic Indicators Briefs

These monthly briefs analyze the most recent data available on health sector employment, spending, prices, and utilization—helping to fill gaps in the official government data.

Below are highlights from this month's reports:

Spending: Strong drug spending growth contributes to modest acceleration in health spending

• At $3.79 trillion (seasonally adjusted annual rate), national health spending in April 2019 was 4.7% higher than it was in April 2018. The April 2019 nominal gross domestic product (GDP) growth over a 12-month period was 4.2%, and the resulting health spending share of GDP was 17.9%.
• Spending in April 2019, year over year, increased in all major categories. Spending on prescription drugs grew the fastest, at 7.7%. Growth in spending on dental services was the slowest, at 3.3%.
• This month’s spending brief provides a second look at national health spending for the first quarter of 2019 and suggests that first quarter spending grew by 4.6%, year over year. The revised first quarter estimate, combined with our April estimate of 4.7% year-over-year growth and the lower 4.0% growth rate in the fourth quarter of 2018, reinforce the observation that health spending has accelerated modestly so far this year. However, first quarter health spending growth remains below the year-over-year first quarter growth in GDP of 5.1%, though April’s growth in national health spending exceeds April’s GDP growth of 4.2%.

Labor: Health care hiring continues to slow in Q2 2019

• Health care added 15,700 new jobs in May, less than half the 12-month average of 32,500. Health job growth in the first two months of Q2 2019 has slowed to about half the pace of Q1 2019.
• Year over year (May 2019 compared to May 2018), health jobs grew by 2.4% while non-health jobs grew by 1.5%. Combined with downward revisions to non-health jobs through April, the health share of total jobs is at a new high of 10.82%.
• All broad health care settings added fewer jobs than average. Ambulatory care settings added 12,200 jobs (12-month average 21,100), hospitals added 3,000 jobs (average 8,600), and nursing homes added 500 jobs (average 2,900). 

Prices: With drug prices falling, health care price growth holds at low 1.5% rate

• In May 2019, annual growth in the Health Care Price Index (HCPI) was 1.5%, equal to the April rate. Health care inflation is amazingly low for this stage of the economic recovery. May 2019 was the 119th month of expansion following the Great Recession, yet the HCPI growth is well below 2%.
• Year-over-year hospital price growth was 2.0%—equal to the April rate. Physician price growth rose to 1.0% in May from 0.7% in April. Drug price growth was -1.0% in May, down sharply from 0.3% in April, and near the -1.2% annual rate in February (the lowest growth since September 1972).

These monthly briefs analyze the most recent data available on health sector employment, spending, prices, and utilization—helping to fill gaps in the official government data.

Below are highlights from this month's reports:

Spending: Strong drug spending growth contributes to modest acceleration in health spending

• At $3.79 trillion (seasonally adjusted annual rate), national health spending in April 2019 was 4.7% higher than it was in April 2018. The April 2019 nominal gross domestic product (GDP) growth over a 12-month period was 4.2%, and the resulting health spending share of GDP was 17.9%.
• Spending in April 2019, year over year, increased in all major categories. Spending on prescription drugs grew the fastest, at 7.7%. Growth in spending on dental services was the slowest, at 3.3%.
• This month’s spending brief provides a second look at national health spending for the first quarter of 2019 and suggests that first quarter spending grew by 4.6%, year over year. The revised first quarter estimate, combined with our April estimate of 4.7% year-over-year growth and the lower 4.0% growth rate in the fourth quarter of 2018, reinforce the observation that health spending has accelerated modestly so far this year. However, first quarter health spending growth remains below the year-over-year first quarter growth in GDP of 5.1%, though April’s growth in national health spending exceeds April’s GDP growth of 4.2%.

Labor: Health care hiring continues to slow in Q2 2019

• Health care added 15,700 new jobs in May, less than half the 12-month average of 32,500. Health job growth in the first two months of Q2 2019 has slowed to about half the pace of Q1 2019.
• Year over year (May 2019 compared to May 2018), health jobs grew by 2.4% while non-health jobs grew by 1.5%. Combined with downward revisions to non-health jobs through April, the health share of total jobs is at a new high of 10.82%.
• All broad health care settings added fewer jobs than average. Ambulatory care settings added 12,200 jobs (12-month average 21,100), hospitals added 3,000 jobs (average 8,600), and nursing homes added 500 jobs (average 2,900). 

Prices: With drug prices falling, health care price growth holds at low 1.5% rate

• In May 2019, annual growth in the Health Care Price Index (HCPI) was 1.5%, equal to the April rate. Health care inflation is amazingly low for this stage of the economic recovery. May 2019 was the 119th month of expansion following the Great Recession, yet the HCPI growth is well below 2%.
• Year-over-year hospital price growth was 2.0%—equal to the April rate. Physician price growth rose to 1.0% in May from 0.7% in April. Drug price growth was -1.0% in May, down sharply from 0.3% in April, and near the -1.2% annual rate in February (the lowest growth since September 1972).