October 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 October 2021 briefs.

Health spending surpasses $4 trillion, but GDP share continues to fall

• National health spending in August 2021 was 7.2% higher than in August 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 3.6% through August 2021. As of June 2021, annualized health spending exceeded $4 trillion for the first time in history.
• Health spending has grown more slowly than gross domestic product (GDP) in recent months and now stands at 17.5% of GDP; it was 18.0% in January and February 2020, before the start of the pandemic.
• The magnitude of the drop and subsequent recovery in health spending continues to vary by category of spending, with spending on hospital care and home health care showing the greatest growth since January 2020, at 4.9% each, while net change in spending on dental services still lags the other categories, at -10.7%.

Economywide inflation continues to overshadow health care price growth

• Growth in the overall Health Care Price Index (HCPI) increased slightly in September, with prices 2.0% higher than they were a year ago, compared to the 1.6% growth rate seen in August.
• The 2.0% growth rate continues a period of moderate overall health care price increases, where monthly year-over-year price growth has held in a very tight range (around 2.0% since around April 2021).
• Health care price growth remained moderate despite continued elevated economywide inflation, as measured by both the consumer price index (CPI) and producer price index (PPI), that were at 5.4% and 8.6% in September.
• Year-over-year growth in an implicit measure of health care utilization (spending growth minus changes in prices) remains high, and increased slightly in August, now at 6.6% year over year, increasing from the slightly revised 6.4% rate in July. 

Health care employment falls in September, driven by hospitals and residential care     

• Health care employment fell by 17,500 jobs in September, with losses in hospitals (-8,100 jobs) and nursing and residential care settings (-37,600 jobs) outweighing gains in ambulatory care settings (28,200 jobs). Revisions through July were modest, adjusting total health care jobs up by 7,000.
• Through the first three quarters of 2021, hospital employment is down 31,000 jobs and nursing and residential care employment is down 150,000 jobs. Ambulatory care has gained 170,000 jobs in 2021.
• Compared to the February 2020 pre-pandemic peak, employment in ambulatory care settings has almost completely returned, at about 5,000 fewer jobs (-0.1%), while hospitals employ 93,000 fewer jobs (-1.8%). Overall health care employment is 524,00 jobs (3.2%) below the February 2020 pre-pandemic peak.
• Employment in residential care settings continues to decline and is down by 426,000 jobs (-12.6%) from February 2020; down 240,000 jobs (-15.2%) in nursing homes and 184,000 (-10.3%) in other residential care.
• The economy added 194,000 jobs in September and revisions through July added another 169,000 jobs, for a total of 5 million jobs added in 2021. Total employment remains about 5 million jobs, or 3.3%, below pre-pandemic levels. The unemployment rate fell to 4.8%.