This section analyzes how health care cost growth affects the economy using available secondary data from a variety of sources. The quantitative analysis described below examines effects on three sectors: aggregate economic indicators, industries, and state governments. The analyses involving aggregate economic indicators and state government fina
As spending on health care accounts for a higher percentage of GDP, the health sector is a major and rapidly growing source of employment for U.S. workers. According to the Bureau of Labor Statistics (2006), and as shown in Table 2 below, the health care sector employed over 10 million workers in 2006. Over the period 1998 to 2006, employment
There is some evidence that rising health care expenditures have led to a rise in uninsurance rates among U.S. households. Evidence from recent surveys also indicates that a significant proportion of consumers, especially the uninsured, are burdened by debt due to medical bills and sometimes forego needed medical care and other spending due to h
Rapid growth in health insurance premiums also affects households. Firms faced with rising health care costs may limit wage increases, reduce health insurance benefits or require employees to pay a greater share of costs, or increase the number of hours worked (Goldman, Sood & Leibowitz, 2005; Cutler and Madrian 1996). Goldman, Sood &
The share of health care expenditures borne by federal, state and local governments has increased over time. There is some evidence that governments are cutting down on health expenditures by reducing reimbursement to providers, increasing patient cost sharing, reducing eligibility and generosity of public insurance and reducing expenditures on ot
The Effect of Health Care Cost Growth on the U.S. Economy. 3.3 Effect on Federal and State Government
For many years, the public sector has faced health care costs that are rising more rapidly than revenues.
There is little empirical research on how health care costs affect profits, revenues, output, or competitiveness of U.S. employers. There is some evidence that rising health care costs can lead to a decline in employment.Economists are divided in their opinion as to how health spending growth affects wages, employment, and output.
In the U.S., the private sector bears a large part of the burden of rapidly rising health care costs because about three-fifths of all Americans have employer-sponsored health insurance. The popularity of employer provided insurance in the US partly stems from the fact that employer contributions to health insurance premiums are exempt from income
Anecdotal evidence suggests that rising health care costs have a negative effect on the U.S. economy. However, there are no empirically rigorous studies that have examined the causal impact of health care cost growth on aggregate economic outcomes. Studies that examine the association between per capita income or GDP and health care costs almost a
The Effect of Health Care Cost Growth on the U.S. Economy. Is Increased Spending on Health Care Sustainable?
By 2014, 18.7% of GDP could be spent on health care (Heffler et al., 2005); this could rise to 27% of GDP by 2040 (Warshawsky, 1999). Is such a high share of spending on health care affordable or sustainable?
Rising income leads to higher expenditures on health . Hall and Jones (2004) show that the rising share of health care in GDP may reflect the natural course of economic growth: as individuals get richer, one of the most valuable and productive opportunities for spending is to purchase better health and longer lives.
Increased spending on health could stimulate job growth in certain sectors . Pauly (2003) argues that rising health care spending naturally results in rapid growth in the health care and related sectors, and in employment and incomes for workers in those sectors. Anecdotal evidence supports this hypothesis.
There are no large scale studies that directly examine the detrimental effect of health care cost growth on aggregate economic outcomes such as per capita income, inflation, and unemployment rate. However, there is evidence of a negative effect on employment, which we discuss in a subsequent sub-section. Anecdotal evidence from several newspaper
This section presents findings from a systematic review of peer-reviewed academic papers, anecdotal evidence published in the popular press, and findings from secondary data published by government agencies and other research institutions. The literature review was carried out in the following three steps – developing key words or search terms,
The Effect of Health Care Cost Growth on the U.S. Economy. 2. Conceptual Overview of Potential Mechnisms Through Which Health Care Inflation Could Affect the Us Economy
Not surprisingly, the dramatic increases in health care spending and the share of GDP devoted to health care have raised concerns about the negative impact of health care cost inflation on the U.S. economy. In an era of global economic markets, these concerns are reinforced by the status of the U.S. as a spending outlier among competing nations.
The rate of growth in health care spending in the U.S. has outpaced the growth rate in the gross domestic product (GDP), inflation, and population for many years. Between 1940 and 1990, the annual rate of growth in real health spending per capita ranged from 3.6% in the 1960s to 6.5% in the 1990s. Correspondingly, the share of GDP accounted fo
Final Report Prepared by: Neeraj Sood, Arkadipta Ghosh, and Jose J. Escarse September, 2007 Prepared for: Office of the Assistant Secretary for Planning and Evaluation (ASPE) U.S. Department of Health and Human Services (HHS)
Characteristic Alabama Florida Michigan New Jersey APPENDIX TABLE 1 LOGISTIC REGRESSION OF THE PROBABILITY OF MAINTAINING MEDICAID COVERAGE WHEN ADULTS LEAVE AFDC (Adults in HMOs Excluded) Estimated Odds Ratio a