2015 GDP: Health Services Spending Grew More Than Twice As Fast as Non-Health GDP

BEALast Friday’s release of the third estimate of Q4 Gross Domestic Product and annual GDP confirmed spending on health services grew at more than twice the rate of growth in non-health GDP in 2015.

For Q4, the third estimate significantly reduced the share of GDP allocated to health services from the previous second estimate (Table I). At $18.7 billion (annualized), growth in health services spending accounted for almost one fifth of GDP growth. This was sa much faster rate of growth (3.6 percent) than for non-health GDP (2.1 percent). Almost all Q4 GDP growth was in services, not goods. Personal consumption expenditure on goods actually dropped.

2016 GDP TI

The results for 2014 Q4 to 2015 Q4 show a slightly smaller share of GDP growth coming from health services (Table II). Health services grew 4.4 percent, versus 2.9 percent for non-health GDP. At $89 billion annualized, growth in health services accounted for one quarter of services growth.

2016 GDP T2

When it comes to the annual change from 2014 to 2015, inflation-adjusted health services spending grew by 4.7 percent, versus only 2.1 percent for non-health GDP (Table III). Growth in health services spending accounted for over one fifth of GDP growth, 41 percent of services growth, and one quarter of growth in personal consumption expenditures.

2016 GDP T3

Conclusion: There is no health spending slowdown.

Technical note: When I discuss health services in these quarterly GDP releases, I mean only health services. I do not include purchases of medical equipment, or facilities construction. While I include Medicare and Medicaid, I do not include Veterans Health Administration or other government benefits. So, these dollar figures undercount the amount of our economy consumed by the government-health complex.

(See: Measuring the Economy: A Primer on the GDP and the National Income and Product Accounts, Bureau of Economic Analysis, October 2014, pages 5-2 and 5-3; Micah B. Hartman, et al., “A Reconciliation of Health Care Expenditures in the National Health Expenditures Accounts and in Gross Domestic Product,” Research Spotlight, Survey of Current Business, September 2010, pages 42-52.)

Comments (3)

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  1. Devon Herrick says:

    Historically, medical spending has grown at twice the rate of national income. It seemed to slow a little in recent years — probably due to the recession and possibly because of higher cost-sharing. I gather this means Obamacare guaranteed issue / subsidies have boosted spending again.

  2. Wanda Jones says:

    John–this is important. So many of our leaders KNOW NOTHING of this. Could your organization put out a data summary for the doctrinaire uninformed.


    Wanda J.