December 2020 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—helping to fill gaps in the official government data. Below are highlights from the December 2020 briefs:

National health spending continues slow recovery 

• At $3.91 trillion (seasonally adjusted annual rate), national health spending in October 2020 was 0.8% higher than in October 2019.
• The October 2020 nominal gross domestic product (GDP) was 0.7% lower than in October 2019, and the resulting health-spending share of GDP was 18.1%, and 17.6% of potential GDP (PGDP). 
• Spending in October 2020, year over year, declined in some major categories and grew in others. The greatest decline was in spending on dental services, at -14.1%. The greatest increase was in home health care, which grew by 18.2%

Hospital and nursing home care prices lead growth for November 

• After reaching a peak year over year rate of 2.8% in April, overall US health care price growth has slowed in the second half of 2020, settling at 2.0% growth in November 2020. This is the same as the previous month.
• Price growth across most major categories also continued previous trends—hospital and nursing home care prices continue to lead the major categories at 3.3% and 3.8% growth respectively. Physician services price growth continues moderately (1.2%) and prescription drug price growth was negative again at -0.4%.
• The gap in overall price growth between payers closed slightly in November. Public payer growth is still faster (3.0%), but private prices rose from a prior low (1.7%) to 2.2%, while the public payers slowed in November.
• Our implied measure of health care utilization (spending growth net of price growth), shows that most major categories of health care continue to have negative year-over-year changes in use, with the exception of prescription drugs, non-durable medical products, and home health care. 

Health care has regained 2/3 of jobs lost; still 500K below pre-COVID-19 level

• Health care added 46,000 jobs, continuing to regain jobs but at a diminishing rate.
• Health care employment is still down by more than 500,000 jobs, or 3.2%, from the February employment peak.
• By setting, only one sub-setting—outpatient care centers—is back to February employment levels. This category includes urgent care centers, outpatient behavioral health clinics, and community health centers.
• Employment in hospitals and across all ambulatory services remains about 2% below February employment.
• Nursing and residential care employment continues to fall, with 250,000 fewer jobs in November compared to February, a 7.4% decline.
• The economy overall gained 245,000 jobs in November, a solid gain but less than half the number of jobs gained in the previous two months. Just over half (56%) of the 22.16 million jobs lost this spring have come back through November. The unemployment rate fell from 6.9% to 6.7%.