Health Care Spending Accounts for Almost Half of the Recovery

Here is the most interesting fact about the economy that you’ve never heard: Without health-care spending, the rest of the economy is barely producing more than it did in late 2007, just before the start of the Great Recession. We’ve spent 5½ years struggling to get back where we were, and many industries are hardly making it.

This sobering insight comes from the Center for Sustainable Health Spending in Ann Arbor, Mich., which compares health spending to the economy’s total output, gross domestic product (GDP). From December 2007 to June 2013, health spending rose a respectable 14.7 percent. Meanwhile, GDP grew a lowly 4.6 percent. Exclude health spending from GDP, and its growth is only 2.7 percent.

Source: Robert Samuelson.

Comments (11)

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  1. Bubba says:

    So basically, we’re producing little more than we did six years ago except for shoveling more taxpayer money into Medicare, Medicaid and employer-subsidized care for middle-aged workers. It certainly cannot be attributed to my medical care: I’ve only seen the doctor once in that time period — at a cost of about $125.

  2. Ken says:

    wow. I’m not sure this is good or bad.

    • Clarence says:

      I am pretty sure it’s bad.

    • JD says:

      We aren’t actually growing (much), we’re just shoveling public money into health care entitlements (mostly).

      • John Fembup says:

        I’m curious.

        Suppose the evening news says “Good news, auto sales up 10% since last year.”

        And the next sentence is , “Bad news, medical care spending up 10% since last year.”

        Why is one good and the other bad?

        Aren’t we just seeing a continuation of the transition from a manufacturing economy to a services economy – that has been taking place since the 1960’s?

        Is that necessarily “bad”? If so, why?

  3. Sam says:

    Very interesting. I don’t like this, but I cannot say that it’s all bad.

    • Helga says:

      Lower spending or output in any sector of the economy is bad. We want to constantly grow our GDP, not decrease it.

  4. JD says:

    A good lesson on taking GDP numbers at face value.