March 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 March 2022 briefs.

Health spending growth declines with decline in federal government support

• National health spending in January 2022 grew by 4.0%, year over year, and was lower in January 2022 than in December 2021, reflecting a decline in federal government support in response to the COVID-induced recession.
• Health spending in January 2022 represented 17.9% of GDP, the lowest value since March 2020, again reflecting the decline in federal government support as well as rapid GDP growth.
• Later this month, CMS is expected to release their national health spending projections for the years 2021 through 2030. Next month’s spending brief will incorporate these projections for 2021 and the beginning of 2022, which may result in significant revisions to our spending estimates.

The gap between health care and economywide price growth sets a record

• Overall Health Care Price Index (HCPI) growth slowed in February, falling to 2.1% year over year from 2.4% a month prior, keeping it near the average growth seen over the past 12 months.
• Health care price growth remains much lower than expected given economywide inflation continues to increase—February CPI growth was 7.9% and PPI growth was 10.0%, both faster than a month before.
• Price growth fell for most major health care service categories—with hospital, physician, dental, home health, and nursing home care growth slower than January. Prescription drug price growth increased in February.
• Growth in prices paid by private insurance for health care services fell in February to 3.1% year over year, but remained above Medicare and Medicaid price growth, at 1.1% and 1.9% respectively.
• Our estimate of implicit utilization (spending growth minus changes in prices) shows overall health sector utilization increased by 4.2% year over year in January 2022, with a twelve-month average increase of 3.1%. 

Health care hiring picks up in February 2022 amid strong economywide job growth

• Health care added 63,500 jobs in February 2022, the largest monthly increase since September 2020. Most of the growth was in ambulatory care settings, which added 53,600 jobs, with notable hiring seen in home health, physician offices, and offices of other health care practitioners.
• Hospitals added a modest 2,700 jobs. Residential care settings added 7,200 jobs, most in “other nursing and residential care facilities” (5,600) but with a slight uptick in nursing home jobs (1,600).
• It has been two years since health employment was at its February 2020 pre-pandemic peak of 16.491 million jobs. As of February 2022, health employment stands at 16.185 million jobs, about 300,000 jobs (1.9%) below the peak, and with jobs shifting from inpatient and residential settings to ambulatory settings. Employment in ambulatory care has fully recovered and is now about 200,000 jobs (2.5%) above the February 2020 level, while hospital employment remains down by 107,000 jobs (2% decline) and nursing and residential care is down by nearly 400,000 jobs (11.8% decline).
• The economy added 678,000 jobs in February and revisions added another 92,000 jobs. Over the first two months of 2022, the economy averaged 580,000 new jobs per month, comparable to the average 562,000 jobs per month added in 2021. If this pace is maintained, employment will return to the pre-pandemic level by mid-summer. The unemployment rate fell to 3.8%, nearing the pre-pandemic low of 3.5%.