May 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: National health spending shows signs of acceleration in the first quarter of 2019

• At $3.76 trillion (seasonally adjusted annual rate), national health spending in March 2019 was 4.6% higher than it was in March 2018. The March 2019 nominal gross domestic product (GDP) growth over a 12-month period was 4.6%, and the resulting health spending share of GDP was 17.9%
• Most surprising was the apparent acceleration in prescription drug spending, whose year-over-year growth was 4.9% in December and increased to 8.7% in March – the rate in our time series since October 2015. However, BEA’s preliminary estimate does not account for rebates from drug manufacturers, which are not available to the government until much later.
• With March 2019, the streak of 17 consecutive months in which year-over-year growth in health spending was less than GDP growth has come to an end (both grew at 4.6% and GDP growth is anticipated to slow further in coming months)
• Spending in March 2019, year over year, increased in all major categories. Spending on prescription drugs grew the fastest, at 8.7%. Growth in spending on dental services was the slowest, at 1.4%.

Download the full spending brief.​

Labor: After blockbuster growth for 2 quarters, April health care hiring reverts to early 2018 levels

• After a very strong Q4 2018 and Q1 2019, health care hiring grew at a more moderate pace in April, adding 27,000 new jobs, less than the 12-month average of 33,600
• Over the last 12 months, total private-sector health care employment grew by 403,000 jobs, or 2.5%. During this period, total non-health payroll employment increased by 2.2 million jobs, or 1.7%. The health care share of total employment held at the record high of 10.81%
• All broad health care settings added slightly fewer jobs than average. Ambulatory care settings added 17,200 jobs (12-month average 21,800), hospitals added 8,300 jobs (average 8,800), and nursing homes added 1,500 jobs (average 3,000).

Download the full labor brief.​

Prices: Health care price growth moderately higher; drug price growth returns to positive

• In April 2019, annual growth in the Health Care Price Index (HCPI) was 1.5%, up from 3 consecutive months at 1.3%.
• Year-over-year hospital price growth was 2.0%, up from 1.6% in March. Physician price growth rose to 0.7% in April from 0.5% in March. Drug price growth at 0.3% was up from -0.4% in March and -1.2% in February (the lowest growth since September 1972)!
• Since July 2018 we have observed exceptionally slow growth in prescription drug prices. Indeed, for these 10 months, price growth is rising at an annual rate of 0.2%. The closest recent period would be a growth rate of 0.4% for 10 months in 2013. But there is reason to think this situation will reverse in the next few months, beginning in July 2019, likely resulting in higher growth from these lower baseline values (12 months earlier). There may also be mismeasurement at work given other evidence of more than 500 drugs seeing price increases in the first quarter of 2019.
• The big news for overall health care prices continues to be the phenomenon of economy-wide prices growing more quickly than the HCPI—20 months and counting, and now tied for the record established in 2013-2014. We have likely already broken this record, but we must wait for April 2019 estimated GDP deflator data. This has massive implications for the burden that health care spending imposes on the economy and our social wellbeing
• It becomes clearer with each passing month that the old paradigm of a weak economy and low inflation potentially putting downward pressure on-out-of-control health care price growth, is being replaced by a new paradigm of low health care price growth causing low economy-wide inflation.

Download the full price brief.​

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: National health spending shows signs of acceleration in the first quarter of 2019

• At $3.76 trillion (seasonally adjusted annual rate), national health spending in March 2019 was 4.6% higher than it was in March 2018. The March 2019 nominal gross domestic product (GDP) growth over a 12-month period was 4.6%, and the resulting health spending share of GDP was 17.9%
• Most surprising was the apparent acceleration in prescription drug spending, whose year-over-year growth was 4.9% in December and increased to 8.7% in March – the rate in our time series since October 2015. However, BEA’s preliminary estimate does not account for rebates from drug manufacturers, which are not available to the government until much later.
• With March 2019, the streak of 17 consecutive months in which year-over-year growth in health spending was less than GDP growth has come to an end (both grew at 4.6% and GDP growth is anticipated to slow further in coming months)
• Spending in March 2019, year over year, increased in all major categories. Spending on prescription drugs grew the fastest, at 8.7%. Growth in spending on dental services was the slowest, at 1.4%.

Download the full spending brief.​

Labor: After blockbuster growth for 2 quarters, April health care hiring reverts to early 2018 levels

• After a very strong Q4 2018 and Q1 2019, health care hiring grew at a more moderate pace in April, adding 27,000 new jobs, less than the 12-month average of 33,600
• Over the last 12 months, total private-sector health care employment grew by 403,000 jobs, or 2.5%. During this period, total non-health payroll employment increased by 2.2 million jobs, or 1.7%. The health care share of total employment held at the record high of 10.81%
• All broad health care settings added slightly fewer jobs than average. Ambulatory care settings added 17,200 jobs (12-month average 21,800), hospitals added 8,300 jobs (average 8,800), and nursing homes added 1,500 jobs (average 3,000).

Download the full labor brief.​

Prices: Health care price growth moderately higher; drug price growth returns to positive

• In April 2019, annual growth in the Health Care Price Index (HCPI) was 1.5%, up from 3 consecutive months at 1.3%.
• Year-over-year hospital price growth was 2.0%, up from 1.6% in March. Physician price growth rose to 0.7% in April from 0.5% in March. Drug price growth at 0.3% was up from -0.4% in March and -1.2% in February (the lowest growth since September 1972)!
• Since July 2018 we have observed exceptionally slow growth in prescription drug prices. Indeed, for these 10 months, price growth is rising at an annual rate of 0.2%. The closest recent period would be a growth rate of 0.4% for 10 months in 2013. But there is reason to think this situation will reverse in the next few months, beginning in July 2019, likely resulting in higher growth from these lower baseline values (12 months earlier). There may also be mismeasurement at work given other evidence of more than 500 drugs seeing price increases in the first quarter of 2019.
• The big news for overall health care prices continues to be the phenomenon of economy-wide prices growing more quickly than the HCPI—20 months and counting, and now tied for the record established in 2013-2014. We have likely already broken this record, but we must wait for April 2019 estimated GDP deflator data. This has massive implications for the burden that health care spending imposes on the economy and our social wellbeing
• It becomes clearer with each passing month that the old paradigm of a weak economy and low inflation potentially putting downward pressure on-out-of-control health care price growth, is being replaced by a new paradigm of low health care price growth causing low economy-wide inflation.

Download the full price brief.​