July 2022 Health Sector Economic Indicators Briefs

Economic Indicators | July 20, 2022

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 July 2022 briefs.

National health spending continues to decline as a percent of GDP

  • National health spending in May 2022 grew by 5.6%, year over year. In the absence of federal government support in 2021 and 2022, health spending would have grown by 4.9%.
  • GDP in May 2022 was 9.1% higher than in May 2021 as GDP growth continues to outpace health spending growth. The difference in growth is largely attributable to the recent high rate of inflation, which has not yet had a major impact on health spending.
  • In May 2022, health spending accounted for 18.0% of GDP but this share has been declining steadily over the past several months. It was 18.8% of GDP in December 2021.

Overall health care price growth finally accelerates as private prices jump in June

  • Growth in the overall Health Care Price Index (HCPI) increased to 2.8% year over year in June, up from 2.0% in May. This 0.8 percentage point increase from the prior month was the fastest since January 2007.
  • The acceleration in overall prices is mainly attributable to higher private prices—private price growth for all services jumped from 3.0% in the prior month to 3.9% in June and private price growth for hospitals was even faster at 4.9% year over year.
  • Economywide inflation also continued in June, as CPI year-over-year growth increased to 9.1% and PPI growth increased to 11.3%. Services CPI growth (excluding healthcare) increased to 6.4% and commodities inflation increased again to 13.4% year over year.
  • Among major health care categories, physician services increased the least in June (0.5%), while hospital price growth (3.5%) and dental care services (4.7%) increased the fastest.
  • Growth in our implicit measure of utilization for May slowed slightly to 2.4%, while the somewhat smoother three-month average was even lower, at 2.1%.

Health care adds a robust 56,700 jobs in June, including 20,500 in hospitals

  • Health care employment grew by 56,700 jobs in June 2022. Gains were seen in all major settings of care, with ambulatory care adding 28,200 jobs, hospitals adding 20,500 jobs, and nursing and residential care facilities adding 8,000 jobs.
  • Health care employment is 176,000 jobs, or 1.1%, below the pre-pandemic peak. Employment in ambulatory settings is now 260,000 jobs (3.3%) above where it was in February 2020, while hospital employment remains 57,000 jobs (1.1%) below February 2020 and nursing and residential care employment is down by 379,000 jobs (11.2% decline).
  • The economy added 372,000 jobs in June, consistent with the average of 381,000 jobs added in the past four months. Total employment is now about half a million jobs and 0.3% below where it was in February 2020, while the unemployment rate remains at 3.6% for the fourth month in a row.
  • Wage data are consistent with a tight labor market overall and in health care in particular. Average hourly earnings in health care grew 7.3% year over year in May 2022 (the most recent industry-level data). Earnings across all private sector jobs grew 5.3% year over year in May and 5.1% in June 2022.
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