Altarum’s Center for Sustainable Health Spending today released its monthly Health Sector Economic briefs, which show unexpected growth in hiring with 36,500 new health care jobs added in June—a significant increase over the average 21,000 per month in the first 5 months of this year.
“The health care hiring jump in June is surprising and we will be watching if that data point is only a fluctuation or the start of an unanticipated upturn in health sector hiring,” said Dr. Charles Roehrig, founding director of Altarum’s Center for Sustainable Health Spending.
At the same time, prices and spending growth in the health sector continued to slow amid uncertainty over congressional health reform deliberations, and growing initiatives among payers and providers to curb costs.
“The slow rate of growth in health care prices, at roughly the rate of economy-wide inflation, is unusual by historical standards and is helping to hold down growth in health spending,” said Roehrig.
Health Care Jobs
With this June increase, health job growth in the first half of 2017 is stepping up its pace, and is now growing at three-quarters the pace seen in 2015 and 2016.
A breakdown by sector shows strong growth in the hospital setting, with an addition of 11,700 jobs per month in June, more than doubling the 4,500 per month average previously seen in 2017. Growth in ambulatory settings was robust as well, with physician offices, clinics, and home health adding 26,000 jobs, well above the 15,000 average seen in January through May.
In June, year-over-year health job growth was 2.1%, outpacing non-health job growth, which was 1.6%. Since the start of the recession in December 2007, the health sector has added 2.6 million jobs—a cumulative gain of 19.8%—while non-health employment has grown by 5.4 million jobs for a cumulative gain of only 4.3%. And, the health share of total employment remains at an all-time high of 10.75%.
Health Care Prices
In May 2017, the Health Care Price Index (HCPI) rose by 1.6% compared to a year earlier, equal to the April rate, the lowest reading since June 2016.
Year-over-year hospital price growth fell from 1.8% to 1.5%. Physician and clinical services price growth was steady at 0.5% in May. Annual drug price growth increased from a 3.1% to a 3.9% rate, which, though well below the 20+ year high recorded in November 2016, was not enough to apply pressure on the overall HCPI rate.
Overall, health care inflation continues to be very low for this stage of the economic recovery. While May 2017 was the 95th month of expansion following the Great Recession, HCPI growth is actually falling.
Health Care Spending
National health spending growth in May continues its decline since December 2016. It is currently estimated at 4.4%, year over year, the lowest since it reached 4.3% in December 2015. This decline was led by hospital spending, whose year-over-year growth has dropped from 6.5% in December 2016 to 3.3% in May. (Hospital spending accounts almost one-third of national health spending.) A significant decline in spending growth for nursing home care, which peaked at 7.0% in December 2016 and is now just 0.7%, is contributing to the overall decline in spending growth.
The health spending share of GDP fell slightly to 18.2% in May, but for the first time since the Great Recession, this GDP share equaled the share of potential GDP, which is a sign that the U.S. economy is at or near full employment.
Year-over-year spending growth currently stands at GDP -0.2% for the month of May, which is of note because it is the first month in which GDP growth exceeded health spending growth in 3 years. This number is tentative and partly reflects a spike in GDP for May. However, it is worth monitoring in the future, since maintaining health spending growth at or below GDP growth is the only path to long-run sustainability.
The complete results are included in Altarum’s Health Sector Economic Indicators briefs (http://www.altarum.org/healthindicators).
There is still time to register for for the Center for Sustainable Health Spending’s Annual Symposium, Beyond the ACA: Health Policy and Sustainable Health Spending. Learn more: http://www.etouches.com/altarumbeyondACA