Ali’s blog

Mostly quant stuff with occasional digressions

Health care spending

Posted by alifinmath on February 26, 2008

Something that Chris (Prouty) just brought to my attention:

By 2017, consumers and taxpayers will spend more than $4 trillion on health care, accounting for one of every $5 spent, the federal government projects.

The 6.7 percent annual increase in spending — nearly three times the rate of inflation— will be largely driven by higher prices and an increased demand for care, the Centers for Medicare and Medicaid Services said Monday. But other factors in the mix include a growing and aging population. The first wave of baby boomers become eligible for Medicare beginning in 2011.

The government economists say it’s hardly a new trend that the health care sector will grow more quickly than the overall economy. Over the past 30 years, health spending has exceeded growth in the gross domestic product by about 2.7 percentage points each year. Over the coming decade, that difference is expected to narrow slightly.

I suspect similar increases will hold in other Western countries and this is not a uniquely American phenomenon. What is uniquely American, however, is the disproportionate share of the GDP healthcare consumes (because of a bureaucratic and profit-driven system).

Not surprisingly, healthcare is one of the areas where jobs will continue to grow in the coming decades. Nurses, medical orderlies, and so on.

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