Health spending share of GDP keeps going up

Though the economy has shown signs of modest improvement, the health care spending share of the nation's GDP hasn't retreated to pre-recession level.

According to the August Health Sector Economic Indicators briefs released by Altarum Institute’s Center for Sustainable Health Spending, health spending reached 18 percent of GDP in June 2009 and has now ticked up to 18.1 percent.

But, analysts say, the slight increase is not because of spending, but a stall in the economy.

“Revised data show that the health spending share of GDP grew from 16.3 percent to 18.0 percent from the start of the recession in December 2007 to its end in June 2009,” says the Center’s director, Dr. Charles Roehrig. “Hitting 18 percent of GDP for the first time is clearly noteworthy, especially when roughly half of health spending is financed by the government. However, weak economic growth rather than high health spending growth is the main culprit for the increase.”

Roehrig also noted the dilemma facing policymakers as they continue to search for new ways to cut federal spending.

“Health care spending is a two-edged sword,” he said. “Clearly it is a very big target. But, as our employment brief also shows, health spending continues to play a significant stabilizing role – creating sizeable health sector employment gains in an economy which is producing too few jobs.”

The complete set of briefs, providing monthly data on health care spending, prices, and employment, can be viewed at www.altarum.org/healthindicators.

 

 

 

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