May 2021 Health Sector Economic Indicators Briefs

Economic Indicators | May 19, 2021

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 May 2021 briefs:

National health spending rebound slows to pre-pandemic growth rates

  • National health spending in March 2021 was 12.5% higher than one year ago, reflecting the recovery from the drop in spending that began in March 2020.
  • Since January 2020, before the pandemic-induced drop began, net growth in national health spending was 1.8% through March 2021.
  • The magnitude of the drop and subsequent recovery has varied by category of spending, with only home health care and hospital spending reaching levels in March 2021 that exceeded their January 2020 levels.
  • The recovery in spending on dental services has lagged all other categories and remains 17.0% below its January 2020 level.

Economywide price growth outpaces the health care sector in April

  • The pace of overall Health Care Price Index (HCPI) growth slowed somewhat in April, with prices 1.9% higher than they were a year ago, compared to the 2.5% growth rate seen in March. April’s price growth, while the slowest so far in 2021, is still above the long-term trend seen over the past five years.
  • Hospital prices continue to be the fastest growing major health care category, increasing 4.2% year over year in April. Conversely, prescription drug price growth remains the slowest growing category and is actually negative, falling -1.9% year over year, the seventh month in a row of negative price growth.
  • Outside of health care, economywide price growth, as measured by both the consumer price index (CPI) and producer price index (PPI), continued to accelerate in April, with those measures increasing to 4.2% and 6.2% growth respectively. This is the fastest growth for economywide CPI since 2008.
  • As a result of overall economywide price growth, the GDP Deflator (GDPD), which lags a month behind other price data, was within 0.2 percentage points of health care price growth in March. We expect in next month’s data April GDPD will exceed health care price growth for the first time since August 2019.

Health employment down slightly in April, driven by hospitals and nursing homes

  • Health care employment fell slightly in April 2021, down 4,100 jobs over the month. Through the first four months of 2021, health care employment is down 29,000 jobs compared to the end of 2020, with gains in jobs in ambulatory care settings more than offset by losses in hospital and nursing and residential care jobs.
  • Hospital employment fell by 5,800 jobs in April. Revisions to previous months’ data added about 6,000 hospital jobs through March, but hospital employment is still down 37,000 jobs compared to the end of 2020.
  • Ambulatory care settings added 21,200 jobs in April and have been growing for the past three months, up 71,000 jobs compared to the end of 2020.
  • Nursing and residential care employment fell by 19,500 jobs in April, with nursing homes down 18,800 jobs and other nursing and residential care down 700 jobs. Overall, nursing and residential care employment is down 63,000 jobs compared to the end of 2020 and has fallen by 339,000 jobs since February 2020.
  • The economy added 266,000 jobs in April, well below consensus expectations of a million or more new jobs. The unemployment rate ticked up slightly to 6.1%. The economy has added 1.8 million jobs through the first four months of 2021 but remains 8.2 million jobs below the February 2020 peak.
View Related: Economics