Virginia’s Health Care Spending and Employment Trends in 2021

Making progress on improving health care quality and value requires detailed and longitudinal data that tracks health sector spending, employment, and costs. States in particular need these data to assess their own health sectors, track changes over time, and compare their progress to national trends. This need for accurate, up-to-date data at the state level has become increasingly important given the ways the COVID-19 pandemic drastically affected the health economy in 2020 and beyond—when unprecedented shifts in health care utilization, spending, employment, and coverage occurred.

In this new report, Altarum experts applied their Health Sector Economic Indicator (HSEI) framework that benchmarks to and builds on official Centers for Medicare & Medicaid Services (CMS) data using other data sources to estimate current trends. They replicate the prior analyses published last year and incorporate new state-level data from CMS, the Commonwealth’s All-Payer Claims Database, and other public sources. New in this year’s report are data from CMS detailing health spending in Virginia by payer and setting and new data on employment trends in the Commonwealth.

Major findings from the report include:

• Total annual personal health care (PHC) spending in Virginia increased from a revised estimate of $72.9 billion in 2020 to $78.5 billion in 2021 (an increase of 7.6%), due primarily to the gradual recovery from the COVID-19 suppression of health care utilization in 2020.
• Total health spending as a percent of the state Gross Domestic Product for Virginia fell to an estimated 15.3% in Q4 2021, the smallest share since at least 2015. The percentage of the economy going to health care in Virginia is well below the national average of 17.8%.
• Health spending per capita in 2021 was over $1,700 lower than the national average in Virginia, with all major spending categories lower than their national comparators. Virginians in 2021, on average, spent $700 less per capita on hospital services, $300 less per capita on professional services, $200 less on prescription drugs, $100 less on nursing home and home health care, and $400 less on other care.  
• The annual single and family premiums for private-sector health insurance have increased 22.5% and 21.5%, respectively, between 2015 and 2021, while combined premium and deductible totals have increased even faster (31.1% for single coverage and 27.7% for family coverage).
• Health care providers in Virginia received a combined $800 million in direct federal government pandemic-related assistance, including $500 million in Paycheck Protection Program funds and $300 million in Provider Relief Funds in 2021. This is down significantly from 2020.
• As of Q4 2021, total health sector employment in Virginia was 0.4% below the beginning of 2019, with nursing homes and residential care employment down 11.7% and hospital workers down 2.0%. Ambulatory setting employment was the only subsector to see employment gains, up 5.1% as of Q4 2021.
• A tight labor market for health care workers led to rising health care wages across a variety of occupations, with the fastest wage growth in 2021 for physicians, who saw a 15.3% year-over-year increase in earnings, putting significant cost pressure on providers looking to hire. Nurse wages also increased in 2021, at a slower growth rate of 3.3% year over year.

A variety of other data, assessments, and insights from Virginia’s health sector are available in the report, including comparisons of the Commonwealth’s health sector to national trends and interpretations of these changes over time. Detailed data sources, methodologies, and assumptions are included in a report appendix. The authors would like to thank the Virginia Hospital and Healthcare Association for their support of this work and the Virginia Health Information organization for their assistance and for providing data from the All-Payer Claims Database.

Read the full report below.