June 2023 Health Sector Economic Indicators Briefs

Economic Indicators | June 28, 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 June 2023 briefs.

Personal health care spending growth exceeds GDP growth for third month 

  • In April 2023, national health spending grew by 5.6%, year over year, and now represents 17.5% of GDP. 
  • Nominal GDP in April 2023 was 6.9% higher than in April 2022, and grew 1.3 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 April increased by 8.8%, year over year, and by 8.0% when subsidies are included, exceeding the GDP growth rate for the third consecutive month.
  • Neglecting government subsidies, spending on nursing home care (13.6%) grew fastest in April, while physician and clinical services spending increased the least (6.4%).
  • Data from CMS’ recently released National Health Expenditure Projections have been incorporated into this month’s spending brief.

Health care price and utilization growth continue upward trends

  • The overall Health Care Price Index (HCPI) increased by 3.3% year over year in May, the same as the slightly revised growth rate observed a month earlier in April. 
  • The 3.3% year over year growth rate is 1.3 percentage points faster than a year ago and tied with the prior month for the fastest overall health care price increase since December 2007.
  • Economywide inflation continued to slow, as overall CPI growth fell from 4.9% to 4.0% and PPI price growth fell from 2.3% to 1.1% in May. 
  • Prices for health care services paid for by private insurance increased by 3.9% in May, while Medicare prices increased 1.0% year over year, and Medicaid prices increased 4.9%.
  • Among the major health care categories, prices for nursing home care (6.9%) and dental care (6.6%) 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 4.7% year over year in April, greater than the 4.6% growth a month prior.

Health care adds 52,400 jobs in May, consistent with 12-month average

  • Health care added 52,400 jobs in May 2023, somewhat more than the average of 42,000 jobs added in the first four months of 2023, but consistent with the 12-month average of 52,000 jobs added per month.
  • Nearly half of May’s health sector job growth was seen in ambulatory care settings, which added 23,900 jobs, followed closely by hospitals, which added nearly 20,000 jobs. 
  • Nursing and residential care facilities added 8.900 jobs, with growth occurring in both nursing homes (2,900 jobs) and other nursing and residential care (6,000 jobs).
  • The economy added 339,000 jobs in May, similar to the average 308,000 added in the first four months of 2023. The unemployment rate rose to 3.7%.
  • Health care wage growth in April 2023 continues to be aligned with economywide wage growth at 4.4% year over year. 
  • Wage growth in health care settings is now highest in hospitals, at 5.1% year over year in April 2023. Wage growth in nursing and residential care has fallen to 4.7% from a high of 11.0% last spring, while wage growth in ambulatory care settings was 3.6%. 
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