July 2023 Health Sector Economic Indicators Briefs

Economic Indicators | July 19, 2023

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 2023 briefs.

High personal health care spending growth is driven by utilization rather than prices 

  • In May 2023, national health spending grew by 6.0%, year over year, and now represents 17.5% of GDP. 
  • Nominal GDP in May 2023 was 6.5% higher than in May 2022, and grew 0.5 percentage points faster than health spending, as the growth rates in GDP and health spending have continued to converge.
  • Neglecting government subsidies, spending on personal health care in May increased by 9.3%, year over year, and by 8.5% when subsidies are included, exceeding the GDP growth rate for the fourth consecutive month.
  • Neglecting government subsidies, year-over-year spending on nursing home care (12.7%) and home health care (12.2%) grew fastest in May, while physician and clinical services spending increased the least (8.2%) among major categories.
  • Personal health care growth (neglecting government subsidies) continues to be dominated by growth in utilization rather than price increases.

Economywide inflation and overall health care price growth slows

  • The overall Health Care Price Index (HCPI) increased by 2.8% year over year in June, slowing nearly half a percentage point from the prior month of May (3.2%). 
  • Through the first six months of 2023, overall health care price growth has averaged 2.9% year over year, slightly above the 2.6% average growth rate seen for the calendar year 2022.
  • Economywide inflation continued to slow in June, as overall CPI growth fell from 4.0% to 3.0% and PPI price growth fell from 0.9% to 0.1%. 
  • Among the major health care categories, prices for nursing home care (6.2%) and dental care (4.6%) grew fastest, while physician and clinical services (0.6%) price growth was the slowest.
  • Our implicit measure of health care utilization growth increased again, up 5.3% year over year in May, greater than the 5.2% growth a month prior.

Health care adds 41,100 jobs in June, similar to year-to-date average

  • Health care added 41,100 jobs in June 2023, similar to the average of 42,300 jobs added thus far this year, but somewhat below the 12-month average gain of 49,900 per month. 
  • June’s health sector job growth was led by growth in hospitals, which added 15,000 jobs, followed closely by ambulatory care settings, which added 13,800 jobs. 
  • Nursing and residential care facilities added 12,300 jobs in June, with growth occurring in both nursing homes (6,200 jobs) and other nursing and residential care (6,100 jobs).
  • The economy added 209,000 jobs in June, somewhat below the year-to-date monthly average of 278,000 jobs. The unemployment rate, at 3.6%, changed little in June.
  • Health care wage growth in May 2023 was 4.1% year over year, slightly below the total private sector wage growth of 4.4%. 
  • Wage growth in health care settings is now highest in hospitals, at 5.4% year over year in May 2023. Wage growth in nursing and residential care has fallen to 4.4% from a high of 11.0% last spring, while wage growth in ambulatory care settings was 3.0%. 
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