We Should Spend More, Not Less, On Health Care; Resilient Health Care Sector is Engine of Growth
In today's Wall Street Journal article "We Don't Spend Enough on Health Care," Craig Karpel argues that increased spending on health care is actually desirable, and suggests that we don't spend too much on health care (currently 20% of GDP), we spend too little - 30% of GDP by the middle of the century would be optimal. Further, he points out the benefits of health care employment to the U.S. economy:
Mr. Obama has said that "the cost of health care has weighed down our economy." No one thinks the 20% of our GDP that's attributable to manufacturing is weighing down the economy, because it's intuitively clear that one person's expenditure on widgets is another person's income. But the same is true of the health-care industry. The $2.4 trillion Americans spend each year for health care doesn't go up in smoke. It's paid to other Americans.
A little-noticed feature of the current recession is the role of the health-care industry as a resilient driver of the general economy. Health-care now accounts for 10.4% of nonfarm employment. Health-care employment grew by 19,600 jobs in July 2009, on a par with the average monthly gain for the first half of 2009, which was down from an average monthly increase of 30,000 in 2008. Remarkably, these gains occurred in a period during which total employment shrank by 6.7 million.
The U.S. health-care economy should be viewed not as a burden but as an engine of growth. Medical and orthopedic equipment exports increased by 65.1% from 2004 through 2008. Pharmaceutical exports were up 74.6%. The unprecedented advances expected to come out of American stem cell, nanotechnology and human genome research—which other countries' constricted health sectors cannot support—will send these already impressive figures skyward.
A study by Deloitte LLP has found that more than 400,000 non-U.S. residents obtained medical care in the U.S. in 2008, and it forecasts an annual increase of 3%. Some 3.5% of inpatient procedures at U.S. hospitals were performed on international patients, many of them escaping from Canada's supposedly superior health system.
"Inbound medical tourism," Deloitte stated, "is primarily driven by the search for high-quality care without extensive waiting periods. Foreign patients are willing to pay more for care within the United States if these two factors play a large role." The deficiencies of the foreign health-care systems the Obama administration wishes to emulate can be counted on to generate ever-increasing revenues for U.S. providers and employment for Americans.
MP: The top chart above of employment in the overall economy vs. health care employment shows that during a time (Jan. 2007 to July 2009) when the U.S. economy lost almost 6 million jobs, the recession-proof health care sector increased employment by almost 1 million jobs.
The chart below (sorry for the color quality) of the monthly change in health care employment reveals an amazing statistic. Since January of 1990, health care employment has increased in every single month except one (July 2003), or in 234 months out of the last 235 months.