The recent trend in job growth fits well with what we see in overall spending. Health care jobs rose impressively for six straight quarters, peaking in Q3 2015. For hospitals, job growth topped out in July of 2015 with a net gain of 22,000. Overall, 2015 was a huge year for hospital hiring, with a net gain of 172,000 jobs, more than four times the number added in 2014. But in each month since July, the number of jobs added has declined, to a low of 12,000 in December. Since labor productivity in health care, (as roughly measured by the ratio of work force to services) has been increasing, the growth in jobs may in some ways understate the increase in capacity in the sector. That is particularly interesting in the hospital context, where inpatient volume has softened in recent years. It will be interesting to see how the occupational composition of the hospital workforce has changed, an examination which should, among other things, show an increased share of hospital workers providing outpatient services.
We have observed many times that growth in health service prices remains extremely low, and this month’s trend report suggests that this trend is continuing, reporting an annual increase in health care prices for 2015 of 1.1 percent, the lowest recorded since Altarum’s series began in 1990. Given the flatness of this series, the two drivers of the recent growth in health spending have been coverage expansion and spending on prescription drugs. The former is clearly slowing, and the impact of that slowing on health care service spending and job growth can already be seen. But what about prescription drugs?