Unbiased Analysis of Today's Healthcare Issues

Health Spending Climbs to 16.2% of GDP

Written By: Jason Shafrin - Jan• 25•10

From the CMS Office of the Actuary:

U.S. health care spending growth decelerated in 2008, increasing 4.4 percent compared to 6.0 percent in 2007, as spending growth slowed for nearly all health care goods and services, particularly for hospitals. Health spending growth for state and local and private sources of funds also slowed while federal health spending growth accelerated in 2008. Total health expenditures reached $2.3 trillion in 2008, which translates to $7,681 per person and 16.2 percent of the nation’s Gross Domestic Product (GDP). Despite slower growth in overall health expenditures, the share of GDP devoted to health care increased from 15.9 percent in 2007.

A detailed table of health expenditures by service type (e.g., hospital, physician services) can be found here.

Also interesting is the changes in spending by payor.  While overall Medicaid expenditure growth decelerated between 2007 and 2008, the composition of expenditures changed significantly.  Federal Medicaid spending increased by 8.4%, but state Medicaid spending actually decrease by 0.1%.  A table providing more information on the changes health expenditures by payer is available here.

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5 Comments

  1. Arthur_500 says:

    Statistics must be taken in their context to be really valuable. What we know is that healthcare spending is an important part of our economy.

    We also recognize that manufacturing has been decreasing as a portion of our economy for quite some time. Service industries have been increasing. However, we still have an economy so what does this all mean?

    We have become very efficient in some areas and there is less need for physical employees. Steel plants once operated by hundreds of employees now utilize dozens. If you look at the portion of each product or service produced and looked at the involvement of IT you would probably be amazed. What this means is that IT has replaced humans.
    Farms that used dozens of employees now are much larger and utilize a quarter of the former staff.

    Healthcare needs humans because we haven’t yet figured out how to replace human physicians and nurses, janitors and lab techs. We live in a “rich” country where manyh people have some means of paying for healthcare which means it meets the definition of supply and demand.

    As we go forward with our economy people need something to do. New ideas will spring up and people will work in other areas. Twenty years from now I would guess that Healthcare spending will be less a portion of GDP because of another generation of people dying off and increased efficiency in the Helathcare field.

    In summary, the percentage of GDP spent on healthcare is not significant. What would be significant is the portion of healthcare that is not paid for by insurance or an employer and must be paid for by the public.

    Military/ veteran healthcare is part of the employment package so it doesn’t count. Medicare is paid for through employment contribution so it doesn’t count (other than the incompetence to manage the program and the extent it goes beyond the contribution budget). The only figures that really count are the expenditures people walk away from and the government has to pick up the tab. In fact, that is the only figure that really matters in the entire Health Care debate.

  2. [...] Also interesting is the changes in spending by payor.  While overall Medicaid expenditure growth decelerated between 2007 and 2008, the composition of expenditures changed significantly.  Federal Medicaid spending increased by 8.4%, but state Medicaid spending actually decrease by 0.1%.  A table providing more information on the changes health expenditures by payer is available here. via healthcare-economist.com [...]

  3. [...] Read this article: Healthcare Economist · Health Spending Climbs to 16.2% of GDP [...]

  4. [...] Link: Healthcare Economist · Health Spending Climbs to 16.2% of GDP [...]

  5. Rociel P says:

    The American people are by far spending the most on health care (Approximately $56,000 per person). Although we manage to spend the most on Health Care we are still a very “sick” nation. I wonder why that is? Our nations cares little about it people, but more about the state of the corporations that “build America”.

    Our Health Care system is failing its people. When thinking about the new age in technology, and how robotics will soon fulfill the jobs that were once for humans, its evident that we have turned our backs on humanity. and THATS the REAL matter in the Health Care debate.

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