The Effect of Health Care Cost Growth on the U.S. Economy. Descriptive Analysis

09/01/2007

It is expected that industries with a larger share of benefits in total compensation will be affected more by the growth in health care costs. Table 9 provides a detailed list of industries by quartiles of the benefit share in total compensation in 1987.

Next, the average changes (percentage) in output and employment over this 19-year period (1987 – 2005) are plotted against the benefit share in 1987 9. The rationale behind this exercise is to explore whether industries that had a higher share of benefits in total compensation initially perform worse than others when health care costs rise over time.

There is a significant pattern in these graphs – industries with a higher share of benefits in 1987 do seem to have worse performance than others in subsequent years. Specifically, industries with a higher initial benefit share had less or even negative growth in employment and output over time (Figures 4 – 6).

Q1
(benefit share <= 14.25%)
Q2 
(benefit share between
14.25 & 17.29%)
Q3
(benefit share between
17.29 & 18.75%)
Q4
(benefit share above
18.75%)
Table 9: List of Industries by Quartiles of the Benefit Share in 1987
Agriculture, forestry,
and fishing
Construction Oil and gas extraction Mining, except oil and gas
Wholesale trade Miscellaneous manufacturing Wood products Primary metals
Retail trade Textiles, apparel and leather Furniture and fixtures Fabricated metal products
Depository and
nondepository institutions
Paper products Nonmetallic mineral products Machinery
Insurance carriers and
related activities
Plastics and rubber products Electronic and other
electric equipment
Motor vehicles and equipment
Real estate Transit and ground
passenger transportation
Other transportation equipment Food and beverage and
tobacco products
Legal services Communications Chemical products Petroleum and coal products
Amusement and recreation
 services
Motion pictures Air transportation Rail transportation
Accommodation Educational services Utilities Water transportation
Other services Health and social services   Trucking and warehousing

Figure 4: Average Change (Percentage) in Employment:
Against Benefit Share in 1987
1987 share benefits,(12.5--31)/average percentage change in employment,(1--(-4)), respectively.

1987 share benefits,(12.5--31)/average percentage change in employment,(1--(-4)), respectively.

Figure 5: Average Change (Percentage) in Gross Output:
Against Benefit Share in 1987
1987 share benefits,(12.--31)/ percentage change in gross output(6--4), respectively.

1987 share benefits,(12.--31)/ percentage change in gross output(6--4), respectively.

Figure 6: Average Change (Percentage) in Value Added to GDP:
Against Benefit Share in 1987
1987 share benefits,(12.5--31)/ percentage change in value added(5--3), respectively.

1987 share benefits,(12.5--31)/ percentage change in value added(5--3), respectively.

View full report

Preview
Download

"report.pdf" (pdf, 309.5Kb)

Note: Documents in PDF format require the Adobe Acrobat Reader®. If you experience problems with PDF documents, please download the latest version of the Reader®