September 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 September 2021 briefs.

National health spending growth in recent months has been modest

• National health spending in July 2021 was 6.6% higher than in July 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 2.5% through July 2021.
• Health spending has grown more slowly than gross domestic product (GDP) in recent months and now stands at 17.4% 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 prescription drugs and home health care showing the greatest growth since January 2020, at 3.8% each, while the net change in spending on dental services still lags the other categories, at -10.3%.

Health sector price growth slows for most categories in August

• Growth in the overall Health Care Price Index (HCPI) slowed again in August, with prices 1.6% higher than they were a year ago, compared to the 2.0% growth rate seen in slightly revised July data (previously at 1.9%).
• The 1.6% growth rate marks the slowest rate since September 2019 and is only the third month since the start of the U.S. COVID-19 pandemic in March 2020 where HCPI grew at less than 2.0% year over year.
• Health care price growth moderated despite continued elevated economywide price growth, as measured by both the consumer price index (CPI) and producer price index (PPI), that were at 5.3% and 8.3% in August.
• Among the major healthcare sectors, price growth slowed for most of the major categories in August: growth in hospital, physician services, prescription drugs, and nursing home care prices were all slower when compared to a month prior.
• Year-over-year growth in an implicit measure of health care utilization (spending growth minus changes in prices) remains high, but is moderating, now at 5.6% as of July. 

Health care employment falls slightly in August, remaining 3.1% below Feb 2020    

• Health care employment fell by 4,900 jobs in August, with slight gains in hospitals (+3,200 jobs) offset by slight losses in ambulatory care settings (-1,200 jobs) plus continued losses in nursing and residential care settings (-6,900 jobs). Revisions through July were modest, adjusting total health care jobs down by 7,000.
• Health care employment is 513,00 jobs (3.1%) below the February 2020 pre-pandemic peak.
• Hospital employment dipped by 35,000 jobs in January 2021 and has varied little since then, plateauing at about 85,000 jobs (1.6%) below the February 2020 peak.
• Employment in residential care settings is down by 383,000 jobs (-11.3%) from the level of February 2020, with 222,000 fewer jobs (-14%) in nursing homes and 162,000 fewer (-9%) in other residential care.
• The economy added 235,000 jobs in August and revisions through July added another 134,000 jobs, for a total of 4.7 million jobs added in 2021. Total employment remains 5.3 million, or 3.5% below pre-pandemic levels. The unemployment rate fell to 5.2%.