September 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 September 2022 briefs.

Economy-wide inflation continues to outpace national health spending growth

• National health spending in July 2022 grew by 4.4%, year over year; in the absence of federal government support in 2021 and 2022, it would have grown by 5.1%, reflecting a decline in federal support.
• Nominal GDP in July 2022 was 9.9% higher than in July 2021 as GDP growth continues to outpace health spending growth. 
• In July 2022, health spending accounted for 17.6% of GDP, the lowest share since September 2019.
• This health spending share of GDP has declined from a recent high of 18.8% of GDP in December 2021, reflecting recent high economywide inflation and lower federal government support in July 2022.

Health care price inflation increases for the fourth straight month 

• The Health Care Price Index (HCPI) increased by 2.9% year over year in August, up slightly from 2.8% growth in July. August’s growth is nearly a full percentage point higher than it was four months ago in April. Private payer price growth continues to be a driving factor—private prices for health services increased 3.9% year over year in August, while Medicaid prices increased by 3.7%, and Medicare prices dropped by 0.6%. 
• Economywide price growth slowed this month, as overall CPI inflation fell to 8.3%. Services CPI growth (excluding health care) increased 7.0% year over year, while commodities inflation slipped marginally to 10.5%.
• Among the major health care categories, physician and clinical services prices increased the least in August (0.4%), while dental care (4.7%) and prescription drug prices (3.2%) increased the fastest.
• Growth in our implicit measure of utilization for July was slower than the month prior, down to 2.2% from 2.4% year-over-year growth in June, continuing a period since January of below average utilization growth.

Health care job growth continues across all major settings of care

• Health care employment grew by 48,200 jobs in August 2022. Gains were seen in all major settings of care, with ambulatory care settings adding 21,900 jobs, hospitals adding 14,700 jobs, and nursing and residential care facilities adding 11,600 jobs.
• Health care employment remains just under the pre-pandemic peak, down 36,000 jobs, or 0.2% below the level of February 2020. If job growth in September is consistent with the growth seen the past five months, health care employment should return to the pre-pandemic level next month, with a redistribution of more than 300,000 jobs from nursing and residential care to ambulatory care settings.
• Employment in ambulatory settings is 341,000 jobs (4.3%) above where it was in February 2020, while hospital employment remains 27,000 jobs (0.5%) below February 2020 and nursing and residential care employment is down by 351,000 jobs (10.4% decline).
• The economy added 315,000 jobs in August and the unemployment rate ticked up to 3.7%.
• Wages in health care continue to grow faster than overall private sector wages. In July 2022, average hourly earnings in health care grew 7.4% year over year, while earnings across all private sector jobs grew 5.2%. By setting of care, average earnings in residential care settings grew by 10.2%, compared to 7.8% in hospitals and 5.4% in ambulatory care settings.