March 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 March 2025 briefs.

Personal health care spending fell from December 2024 to January 2025

• In January 2025, national health spending grew by 6.3%, year over year, but was nearly identical to its December 2024 level. A very small month-over-month decline was driven by a larger decline in spending on personal health care.
• Personal health care spending growth in January was 6.4%, year over year, but fell by nearly 0.1% from December 2024 to January 2025.
• Growth among major spending categories was highest for prescription drugs, at 8.3%, year over year, while spending growth for nursing home care grew the slowest, at 5.4%. For the first time in many months, growth in home health care was not the fastest growing category, growing by 6.1%, year over year.

Year-over-year prescription drug prices increase highest since 2017; first year-over-year increase in physician services prices for Medicare patients in three years

• In February 2025, the overall Health Care Price Index (HCPI) rose to 2.8% from the revised January year over year value of 2.7%.
• Economy-wide inflation fell, with year-over-year growth in the overall Consumer Price Index (CPI) decreasing by 0.2% to 2.8% and growth in the Producer Price Index (PPI) dropping 0.5% to 3.2%.  
• Among the major health care categories, prescription drug prices were the fastest-growing at 4.6%.  This continues a sharp increase in 2025 from an average of 1.4% throughout 2024 and is the highest year-over-year increase since March of 2017.
• For major payers, year-over-year private insurance prices growth for services (3.6%) continued to exceed Medicaid (2.6%) after overtaking it last month.  Medicare service prices increased 1.6%.  Notably, revised data show that Medicare year over-year prices changes for physician services were positive in January for the first time since January 2022.
• The implicit measure of health care utilization growth was 3.7% year over year in January, down from the revised December 2024 value of 4.1%.
• Utilization of physician and clinical services was up 5.4% year over year in January, while dental services rose 5.2%.  Home health care utilization increased 3.7%, continuing a steady drop from a recent peak value of 17.8% in June 2024.  Nursing care facilities utilization trailed the other major categories, up 2.9%.

Health care employment continues steady climb

• In February 2025, health care industry employment increased by 52,000 jobs while non-health care industries increased by 99,000 jobs.
• By major subsector, February’s health care job growth was led by ambulatory health care services, which added 25,600 jobs, followed by hospitals, which added 14,900.  Nursing and residential facilities added 11,500 jobs.
• The hiring rate was 3.3% and the jobs opening rate 6.0% in January.  The total separations rate was 2.9%.
• The unemployment rate was 4.1% in February, up 0.1% from the previous month.
• Nominal health care wage growth in January 2025 was 4.3% year over year, with growth rates of 4.6% in hospitals, 4.5% in ambulatory health care services, and 3.7% in nursing and residential care facilities.