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 September 2023 briefs.
Health spending growth continues to be dominated by utilization over prices
- In July 2023, national health spending grew by 5.7%, year over year, and now represents 17.4% of GDP.
- Nominal GDP in July 2023 was 6.5% higher than in July 2022, and grew 0.8 percentage points faster than health spending.
- Neglecting government subsidies, spending on personal health care in July increased by 7.9%, year over year, and by 7.2% when subsidies are included, exceeding the GDP growth rate for the sixth consecutive month.
- Neglecting government subsidies, year-over-year spending on home health care (12.3%) and dental services (11.6%) grew fastest in July, while spending on hospital care increased the least (6.7%) among major categories.
- Personal health care spending growth (neglecting government subsidies) continues to be dominated by growth in utilization rather than price increases.
Overall health care price and utilization growth fall slightly
- Growth in the overall Health Care Price Index (HCPI) decreased to 2.8% year over year in August, falling 0.1 percentage points from the slightly revised growth rate in July (2.9%).
- Overall year-over-year economywide inflation increased for a second straight month, with CPI rising to 3.7% (up from 3.2% a month prior), and PPI increasing from 0.8% to 1.6% in August. Both appear to be driven by changes in commodities price growth.
- Among the major health care categories, prices for nursing home care (5.6%), dental care (5.3%), and home health care (5.2%) grew fastest, while physician and clinical services (0.6%) price growth was the slowest.
- Private payer price growth slowed again in August, falling to 2.8% year over year overall and 3.2% for hospitals, while continuing to converge with public payer price growth. In August, growth in Medicare and Medicaid hospital prices growth reached 3.2% and 2.0% respectively.
- Our implicit measure of health care utilization growth slowed again in July to 4.3% year over year, and down from a peak in March (5.1% growth).
Health sector jobs show greatest 2-month growth since pandemic recovery
- Health care added 70,900 jobs in August 2023. With a significant upward revision to July’s job growth, the two-month increase of 143,900 is the largest since the initial recovery from the COVID-induced recession.
- August’s health sector job growth was led by growth in ambulatory care settings, which added 39,900 jobs, while hospitals added 14,500 jobs.
- Nursing and residential care facilities added 16,500 jobs in August, with growth occurring in both nursing homes (8,900 jobs) and other nursing and residential care settings (7,600 jobs).
- The economy added 187,000 jobs in August, somewhat below the 12-month average of 257,300 jobs. The unemployment rate grew to 3.8% from July’s rate of 3.5%.
- Health care wage growth in July 2023 was 3.3% year over year, somewhat below the total private sector wage growth of 4.4%.
- Wage growth in health care settings is highest in nursing and residential care, at 4.3% year over year in July 2023. Wage growth in hospitals was 3.8%, while wage growth in ambulatory care settings was 2.8% in July.