February 2025 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 February 2025 briefs.

National health spending grew by 7.4% in 2024

• Initial data for all of 2024 suggest that national health spending grew by 7.4% for the year, while personal health care spending grew by 7.9%.
• In December 2024, national health spending grew by 6.9%, year over year, and represented 18.1% of GDP.
• Personal health care spending growth in December was 7.1%, year over year, with utilization growth continuing to outpace price growth.
• Growth among major spending categories continued to be highest for home health care, at 9.4%, year over year, while spending growth for prescription drugs grew the slowest, at 4.7%. 
   

Year-over-year prescription drug prices increase highest since 2017

• In January 2025, the overall Health Care Price Index (HCPI) fell to 2.7% from the revised December 2024 year-over-year value of 3.0%.
• Economy-wide inflation was largely unchanged, with year-over-year growth in the overall Consumer Price Index (CPI) increasing by 0.1% to 3.0% and growth in the Producer Price Index (PPI) holding at 3.5%.  
• Among the major health care categories, prices for prescription drugs was the fastest-growing at 4.5%.  This is a sharp increase from an average of 1.4% throughout 2024 and is the highest year-over-year increase since March of 2017.  This was followed by hospitals (2.4%) and nursing home care (2.2%).  Physician services was the slowest-growing at 1.6%.
• For major payers, year-over-year private insurance prices growth for services (3.7%) overtook Medicaid (2.3%).  Medicare service prices increased 1.6%.  
• The implicit measure of health care utilization growth was 4.1% year over year in December, down from the revised November value of 4.5%.
• Home health care utilization increased 7.3% year over year, continuing a drop from a recent peak value of 17.8% in June 2024.  This category was followed dental services (5.8%) and physician and clinical services (5.6%).  Hospital care and prescription drugs utilization trailed the other major categories, both at 3.6%.
   

Nursing and residential care facilities employment exceeds pre-pandemic levels for first time

• In January 2025, health care industry employment increased by 43,700 jobs while non-health care industries increased by 99,300 jobs.
• By major subsector, January’s health care job growth was led by ambulatory health care services, which added 16,600 jobs, followed by hospitals, which added 13,900 jobs.  Nursing and residential facilities added 13,200 jobs and finally overtook pre-pandemic employment levels.
• The hiring rate was 3.4% and the jobs opening rate was 5.7% in December 2024.  The total separations rate was 3.1%.
• The unemployment rate was 4.0% in January, down 0.1% from the previous month.
• Nominal health care wage growth in December 2024 was 4.6% year over year, with growth rates of 5.1% in hospitals, 4.3% in ambulatory health care services, and 4.0% in nursing and residential care facilities.