It’s the Economy, Stupid
Victor R. Fuchs of Stanford University concludes, however, that the dismal economy might be playing a much larger role. In a recent report published in The New England Journal of Medicine, he points to a tight relationship between health spending and economic growth: over most of the last six decades, health spending per person has grown roughly 2.4 percentage points faster than the economy. (Eduardo Porter)
So national health expenditures are pro-cyclical with a bit of a lag. I don’t think this is all that surprising.
Even with health “insurance”, as your personal budget constraint shrinks, you put off a lot of expenditures (including health care expenditures that aren’t life saving) until things get better.
The thing is, if this turns into a jobless recovery, with the labor force participation rate being so low (and U-6 being so high), I wonder what happens to that graph.
To that extent, wouldn’t it be fantastic if the data series didn’t stop at 1950, and extended back to the Great Depression?
*With a lag even beyond real GDP + 2.4%.
These is an interesting pattern in the mid-to-late 1960s and early-to-mid 1990s. In the late 1960s, Medicare and Medicaid were established boosting (or prolonging) high health expenditure. In the early 1990s, managed care held down medical spending — but only for a short period due to the public outcry that rationing created.
Seems reasonable. Health Care spending is a significant part of GDP and would also be highly correlated with other Consumption spending.
I’m sure that some people will latch onto this to defend Obamacare or in an effort to engender more support for public healthcare spending.
health spending per person has grown roughly 2.4 percentage points faster than the economy.
– I don’t know much about healthcare, but I don’t think this is a good thing.
People need to exercise more, and look into preventative care!
he points to a tight relationship between health spending and economic growth:
– I feel like this conclusion is pretty safe considering that Healthcare spending is close to a third of our economy.
We don’t need economic indicators to indicate how bad our health care system is. It’s a mixture of special interests, careless individuals letting themselves turn bad foods into addictions and government perpetuating an unhealthy and irresponsible society. Of course spending will go up along the course.
I think you’re right in that this is as much of a cultural and societal problem as it is economical and political. It really all shows where we are as a society.