Top of the Funnel | Macro Data + Policy Position Monitor
JOLTS. Job openings in health care are a grim picture. This week’s report has Job Openings for Health Care and Social Assistance at just over 2 million. Based on distribution of employment between Social Assistance and Health Care of 1/3-2/3, about 1.3 million job openings are attributable to the health care sector. Of course, the actual number is probably quite a bit higher given that the labor shortage is more acute in health care than social assistance.
The number of people quitting the health care workforce continued its steep climb after taking December off. If the sharp acceleration in November is related to the Interim Final Rule mandating vaccinations for health care workers, it is likely not reversible unless and until CMS changes policy. The administration is so dug in on mandates, it is hard to see that happening.
Employment. Total health care employment increased 8k or 0.05% MoM and 1.19% YoY. Of the major sectors, ambulatory and hospitals gained a total of 13k workers, while SNFs lost 4k. Except for undesirable work care settings like nursing facilities and inpatient psychiatric hospitals, employment continues to creep ever so slowly back to 2019 levels.
Of course, to accept 2019 as normal, one must ignore the growth trend before the COVID-19 pandemic which would put full health care employment at around 17M+.
Coming to terms with the persistent lack of workers means 1. Limits on service; 2. Innovation. The latter won’t arrive in time for 1Q earnings so expect more of the former.
Employment chartbook here.
Congress
COVID Relief. A new stand-alone bill for COVID-19 relief is being reattempted. The total size of the package has shrunk to $10B, which we must continue to remind ourselves is a lot of money. The Senate is expected to produce a draft “soon.” It remains to be seen what the House will do.
ARPA-H. If you are looking for an indication of just how ugly things could get for NIH if there is a shift in power on Capitol Hill, look no further than the debate over where to house the Biden administration’s new Defense Department-like research agency, known as ARPA-H. President Biden wanted it housed at NIH. Congress could not agree and left it up to SecHHS Becerra who picked NIH like his boss wanted.
The inevitable result was that House appropriators are not happy. It seems, no one is quite sure NIH is right for the job. They may think that, in part, due to stories like these. No matter what you may think about theories on the origin of SARS-CoV-2, NIH’s management and oversight of its grants has not been up to standard.
Expect the lack of oversight to be corrected by Congress if the November elections permit. ((ILMN (-), TXG (-))
The White House
FY 2023 Budget Release. Without pretending Congress will get a spending bill passed before midterms, we can look at President Biden’s FY 2023 to assess the administration’s priorities:
- More money for NIH and the CDC. A lot more money. Program level increases for the CDC total $32B, from $14B to $47B. Program level increases for NIH amount to $16B, from 46B to 62B. Most of the money intended for the CDC is designated to pandemic preparedness and response. The White House also is asking that about 1.6B be moved into the mandatory spending category to ensure ongoing funding of critical program.
I will be shocked if Congress agrees to fund either agency without a whole lot of Come to Jesus. In 2023 you should expect investigation and oversight hearings of both agencies, assuming the predicted power shift.
- Another significant priority of the White House is behavioral health. The Biden administration is requesting $4B in additional funding for SAMSHA for additional mental health and substance abuse treatment. This funding is probably going to flow through state programs, possibly in coordination with Medicaid priorities.
Other Stuff
Medicare Rule-a-Rama.
- Hospice. Reimbursement increase is proposed at 2.7% which reflects an appreciable increase in CMS’s model for employment costs. However, it is not going to cover what amounts to 5-6% in wage increases in the home care sector. ((CHE (-), AMED (-))
- Inpatient Psychiatric Facilities. Payment update is similar to hospice reflecting the cost inputs for hospitals. According to BLS data released today, the average hourly wage is up 13% yea of year. ((ACHC, (-), UHS (-)
- Inpatient Rehabilitation Facilities. The FY 2023 update will be 2.8%. Wage inflation in that subsector is no better.
Events.
Recent.
Shuffling Off the Mortal Coil: Death in the Age of Pandemic
End of the COVID-19 Gravy Train? Relief Funds, End of PFE + Timing.
Calendar. You can find 2021 here with searchable ticker list. You can find 2022 here.
IPOs + SPACs
With new proposed regulations, I expect the registration withdrawals will continue and the IBS to stop until there is greater clarity on reporting. I doubt $20B just goes away. Providing sound data and reliable information is not that daunting a task unless your first name is Chamath. Bigger question is whether there are enough good health care companies out there that have buttoned up their financial and processes to the extent required for public company disclosure.
Updated SPAC spreadsheet here.
Have a great weekend.
Emily Evans
Managing Director – Health Policy
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