September 2023 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 2023 briefs.

Health spending growth continues to be dominated by utilization over prices 

• In July 2023, national health spending grew by 5.7%, year over year, and now represents 17.4% of GDP.
• Nominal GDP in July 2023 was 6.5% higher than in July 2022, and grew 0.8 percentage points faster than health spending.
• Neglecting government subsidies, spending on personal health care in July increased by 7.9%, year over year, and by 7.2% when subsidies are included, exceeding the GDP growth rate for the sixth consecutive month.
• Neglecting government subsidies, year-over-year spending on home health care (12.3%) and dental services (11.6%) grew fastest in July, while spending on hospital care increased the least (6.7%) among major categories.
• Personal health care spending growth (neglecting government subsidies) continues to be dominated by growth in utilization rather than price increases.

Overall health care price and utilization growth fall slightly  

• Growth in the overall Health Care Price Index (HCPI) decreased to 2.8% year over year in August, falling 0.1 percentage points from the slightly revised growth rate in July (2.9%). 
• Overall year-over-year economywide inflation increased for a second straight month, with CPI rising to 3.7% (up from 3.2% a month prior), and PPI increasing from 0.8% to 1.6% in August. Both appear to be driven by changes in commodities price growth.
• Among the major health care categories, prices for nursing home care (5.6%), dental care (5.3%), and home health care (5.2%) grew fastest, while physician and clinical services (0.6%) price growth was the slowest.
• Private payer price growth slowed again in August, falling to 2.8% year over year overall and 3.2% for hospitals, while continuing to converge with public payer price growth. In August, growth in Medicare and Medicaid hospital prices growth reached 3.2% and 2.0% respectively. 
• Our implicit measure of health care utilization growth slowed again in July to 4.3% year over year, and down from a peak in March (5.1% growth).

Health sector jobs show greatest 2-month growth since pandemic recovery  

• Health care added 70,900 jobs in August 2023. With a significant upward revision to July’s job growth, the two-month increase of 143,900 is the largest since the initial recovery from the COVID-induced recession.
• August’s health sector job growth was led by growth in ambulatory care settings, which added 39,900 jobs, while hospitals added 14,500 jobs. 
• Nursing and residential care facilities added 16,500 jobs in August, with growth occurring in both nursing homes (8,900 jobs) and other nursing and residential care settings (7,600 jobs).
• The economy added 187,000 jobs in August, somewhat below the 12-month average of 257,300 jobs. The unemployment rate grew to 3.8% from July’s rate of 3.5%.
• Health care wage growth in July 2023 was 3.3% year over year, somewhat below the total private sector wage growth of 4.4%. 
• Wage growth in health care settings is highest in nursing and residential care, at 4.3% year over year in July 2023. Wage growth in hospitals was 3.8%, while wage growth in ambulatory care settings was 2.8% in July.