Posts Tagged ‘GDP’
Monday, July 26th, 2010
The federal government’s share of dollars spent on healthcare is expected to soar from five percent of the current GDP to approximately 10 percent by 2035. The increases are likely to continue unabated after that. These projections are based partly on the recently passed healthcare reform legislation, which is expected to increase federal spending in the next 20 years, according to the Congressional Budget Office’s (CBO) analysis, “The Long-Term Budget Outlook”.
“The retirement of the baby boom generation portends a significant and sustained increase in the share of the population receiving benefits from Social Security, Medical and Medicaid. Moreover, per-capita spending for healthcare is likely to continue rising faster than spending per person on other goods and services for many years,” according to the report. The CBO predicts that these factors will increase federal spending relative to the overall economy in the future. Only a major change in government policy will reverse this trend. Once all provisions of the new healthcare law are implemented in 2014, there is a strong possibility that federal spending will decrease by 2030. According to the CBO, reform could yield reduced spending over time.
Peter Orszag, director of the White House Office of Management and Budget, notes “CBO reiterates that the Affordable Care Act will reduce the deficit by more than $100 billion in the current decade and more than $1 trillion in the decade after that - which represents the most deficit reduction enacted since the 1990s.”
Tags: Congressional Budget Office, GDP, healthcare spending, Medicaid, Medicare, Patient Protection and Affordable Care Act, Peter Orszag, social security
Posted in Healthcare, Hospital Systems | No Comments »
Tuesday, July 13th, 2010
Real annual per-capita health spending climbed 4.2 percent between 2000 and 2008 in Organization for Economic Cooperation and Development (OECD) countries, according to a new study. Not surprisingly, the United States led the pack of 31 nations with healthcare spending as a proportion of GDP rising by 16 percent. Next in line were France (11.2 percent); Switzerland (10.7 percent); Austria (10.5 percent); and Germany (10.5 percent). Healthcare spending in the United States was $7,538 person. Compare that to $5,003 in Norway; $4,627 in Switzerland; $4,210 in Luxembourg; and $4,079 in Canada.
According to the OECD, healthcare spending is rising faster than economic growth. The average ratio of healthcare spending to GDP rose from 7.8 percent in 2000 to nine percent in 2008. Technological changes, an aging population and high expectations are among the factors driving up costs, a situation that is unlikely to change in the near future. The Great Recession also led to increases in the ratio of healthcare spending to GDP in several countries. Ireland, for example, saw an increase from 7.5 percent in 2007 to 8.7 percent in 2008, while it rose from 8.4 percent to nine percent in Spain.
Government pays for healthcare coverage in the majority of OECD nations. As a result, government spending on healthcare rose from an average of 12 percent in 1990 to 16 percent in 2008. As a result, nations currently under pressure to reduce budget deficits have some difficult decisions to make to sustain their healthcare systems. The options are to cut the growth of public spending on healthcare, cutting other expenditures, or raising taxes.
Tags: Austria, Canada, France, GDP, Germany, Great Recession, Healthcare, Ireland, Luxembourg, Norway, Spain, Switerland, United States
Posted in Healthcare, Hospital Systems | No Comments »
Tuesday, May 18th, 2010
Healthcare spending in 2009 reached a record high of 17.3 percent of the nation’s GDP, representing a growth rate of 5.7 percent in a year when the general GDP shrank. The Kaiser Family Foundation, a non-profit and non-partisan group reports that healthcare costs for the average family have doubled over the past 10 years.
The almost $2.5 trillion spent in 2009 was $134 billion more than 2008, when healthcare ate up 16.2 percent of the GDP, according to an annual report by the federal Centers for Medicare and Medicaid Services (CMS). “The health system is hurting, and we are seeing that in these numbers,” said Karen David, president of the Commonwealth Fund, a healthcare policy authority. Federal and state spending on Medicaid - the primary health insurance program for low-income Americans - climbed nearly 10 percent in 2009, according to the report. Medicate spending increased eight percent last year.
According to the Kaiser Family Foundation, the average premium for a company-provided family health insurance plan soared from $5,791 in 1999 to $13,375, a 131 percent increase. Employees’ portions of those costs have also risen, from $1,543 on average 10 years ago to $3,515 in 2009.
During 2010, companies said they planned to shift more costs to workers, with 42 percent saying they would increase employees’ premiums and 39 percent said employees would pay more for doctor visits. Another 37 percent said workers would have to pay more for prescriptions. “When healthcare costs continue to rise so much faster than overall inflation in a bad recession, workers and employers really feel the pain. That’s why we are having a health reform debate,” said Drew Altman, Kaiser’s president and CEO.
Tags: Center for Medicare & Medicaid Services, Commonwealth Fund, GDP, healthcare spending, Kaiser Family Foundation, President Barack Obama
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Monday, March 8th, 2010
Economic indicators show that the recession is over. This is the opinion of Rick Mattoon, a senior economist and advisor in the economic research department of the Federal Reserve Bank of Chicago and a lecturer at the Kellogg School of Management at Northwestern University. Rick’s primary research focuses on issues facing the Midwest regional economy.
In a recent interview for the Alter Inspire Podcasts, Mattoon warned that most people probably don’t feel like the nation is coming out of a recession because there are few signs of job creation or easier access to credit. One of the major concerns economists have is that this will be a double-dip “W-shaped” recession because once the bump from the $787 billion stimulus ends, there will be scant pent-up consumer demand for products and services to take the place of government spending.
One positive sign is an uptick in hiring by temporary employment agencies, which usually is considered to be a good harbinger of what future demand will be. Another interesting theory about this particular recession in terms of jobs is the idea that companies adjusted their employee levels much more aggressively at the beginning of this cycle. As a result, they are operating at extremely lean levels and so may hire earlier rather than later.
One problem is that there is a skills mismatch in the economy. Many people who have lost their jobs don’t possess the right skills to find employment in growth industries such as clean energy or healthcare. The challenge is training these individuals to bring their skills up to par.
Rick Mattoon: Is the Recession Over? :
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Tags: American Recovery and Reinvestment Act, Chicago, deficit, Federal Reserve Bank, GDP, Great Recession, inflation, Rick Matton, stimulus bill, treasury bills, United States economic health, wage growth
Posted in Economics, Financing | No Comments »
Tuesday, February 2nd, 2010
Americans spent an average of $7,681 per person on healthcare during 2008, just a 3.5 percent rise over the previous year - the slowest growth rate in 48 years. According to a report issued by the Department of Health and Human Services, healthcare spending totaled $2.3 trillion in 2008 and accounted for 16.2 percent of the GDP.
The culprit is the recession, which achieved what a generation of public officials attempted without success. Federal officials said the slowdown in health spending resulted from the soft economy, people delaying elective procedures, for example, and did not cite any factors that will alter the long-term outlook for continued increases as baby boomers age and physicians rely more on new technologies to treat patients.
According to Micah Hartman, a government statistician who contributed to the report, federal spending for health services and supplies grew 10.4 percent in 2008 and equaled 36 percent of federal receipts, up from 28 percent in 2007. “In 2008, federal Medicaid spending increased 8.4 percent - the highest rate of growth since 2003 - while state spending declined by 0.1 percent, the first decline in these expenditures in program history,” Hartman said. “Spending for healthcare by private businesses grew just 1.2 percent in 2008, in part because of a drop in the proportion of employer-sponsored insurance paid by employers. Private business’ health spending remained relatively flat as a share of compensation at 7.9 percent.”
In other findings, the report noted that “private health insurance premiums and benefits grew in 2008 at their slowest rate since 1967, 3.1 percent and 3.9 percent respectively.” The slowdown reflects a drop in the number of Americans with private health insurance. That fell to 195.4 million in 2008, compared with 196.4 percent in 2007.
Tags: GDP, Healthcare, healthcare reform legislation, healthcare spending, Medicaid, Medicare, Micah Hartman, President Barack Obama, recession
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Tuesday, January 19th, 2010
A Mississippi-based management consultant has an intriguing solution about the ideal way to fund the healthcare reform legislation that is now making its way through Congress. G. Edward Tucker, Jr., suggests that if healthcare is a right, there is also an individual responsibility to fund insurance through taxes, premiums and co-pays.
Tucker’s “Health-Us” program calls for “a federal sales tax provides the funding, which synchronizes healthcare funding with the GDP because the sales tax is a function of what consumers spend. The sales tax automatically considers ‘affordability’ for the family because it is a function of what the family spends. Second, each U.S. citizen under the age of 65 receives two ‘defined contribution’ vouchers for healthcare premiums. The voucher’s value is based on the age and gender of the individual and is a defined contribution for healthcare, not a defined benefit. This approach makes sure that the government does not spend more than the sales tax collected.”
People would use the vouchers to buy private insurance from competing companies or HMOs, which must provide a standard set of benefits and fulfill financial and service criteria. Insurers with excess profits would then funnel that money into members’ health savings plans. Even more ground-breaking is that Tucker’s plan eliminates employer-provided healthcare coverage because everyone receives a voucher.
Tucker estimates that covering all Americans under age 65 would cost $2.2 trillion or 14.22 percent of GDP, based on government data from 2008. His proposal assumes 4.97 percent of GDP savings from improved access to preventive healthcare, eliminating cost-shifting, and increasing competition for health voucher premiums, as well as empowering consumers. Under Tucker’s program, all Americans would have healthcare coverage.
Tags: GDP, Health US, healthcare reform, HMOs, insurance companies, vouchers
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Thursday, November 19th, 2009
The American healthcare system does waste money, and healthcare reform legislation could cure some of the inefficiencies. According to a Thomson Reuters report, the healthcare system wastes between $505 billion and $850 billion annually. The report notes that, “America’s healthcare system is indeed hemorrhaging billions of dollars, and the opportunities to slow the fiscal bleeding are substantial. That’s one-third of the nation’s healthcare bill. The good news is that by attacking waste we can reduce healthcare costs without adversely affecting the quality of care or access to care.”
According to the Thomson Reuters study:
- The paper-based records keeping system discourages information sharing and totals six percent of annual overspending.
- The overuse of antibiotics and lab tests to protect physicians against malpractice costs consumers $200 to $300 billion a year.
- Fraudulent Medicare claims, kickbacks for referrals for unnecessary service and other scams cost consumers up to $200 billion a year.
- Administrative inefficiency and double paperwork account for 18 percent of healthcare waste.
- Mistakes total $50 to $100 billion in unnecessary spending, or 11 percent of the total.
- Preventable conditions such as diabetes cost $30 to $50 million annually.
These findings help explain why American citizens spend more dollars per capita on healthcare and the largest percentage of GDP than any other developed nation. At the same time, the population is unhealthier, with high incidences of diabetes, obesity, heart disease and neonatal deaths.
Tags: GDP, healthcare cost, healthcare reform, healthcare system, President Barack Obama, Thomson Reuters
Posted in Healthcare, Hospital Systems | No Comments »
Thursday, July 16th, 2009
Healthcare providers will slash up to $1.7 trillion in costs over the next 10 years by enhancing the care of chronic diseases, reorganizing administrative procedures and eliminating unnecessary treatments.
This is a sneak peak at how healthcare systems, physicians, pharmaceutical companies, insurers, medical device manufacturers and other stakeholders plan to respond to President Barack Obama’s request that the industry find ways to control patient costs. Among the American Medical Association’s (AMA) suggestions are cutting overused - and often unnecessary — procedures, such as Caesarean sections. The savings are crucial to funding the Obama administration’s proposed health system overhaul.
A new White House study states that reforming healthcare will increase the nation’s GDP by two percent in 2020 and eight percent in 2030, cut unemployment and save families an average of $2,600 a year by 2020. Without healthcare reform, the number of uninsured Americans will rise to 72 million by 2040, compared with 46 million today.
Christina Romer, chair of the president’s Council of Economic Advisers, said “The one thing that’s happened relative to the 1990s is the nightmare scenario is getting closer.” Other recommendations include reducing medical errors, using common insurance forms, improving physician performance standards, readmitting fewer patients to hospitals, improving drug development efficiency and expanding in-home care for patients with long-term illnesses.
Tags: AMA, American Medical Association, Caesarean section, Christina Romer, chronic diseases, Economic Advisers, GDP, healthcare industry, healthcare providers, healthcare reform, Healthcare systems, hospitals, in-home care, insurers, long-term illness, medical device manufacturers, patient costs, patients, pharmaceutical companies, physicians, President Barack Obama, reforming healthcare, treatment, uninsured Americans, White House
Posted in Economics, Healthcare, Hospital Systems | No Comments »
Monday, April 6th, 2009
The recession has put the health care industry’s importance to our economy in sharp relief. It accounted for 17 percent of GDP and added 371,600 jobs last year. Even when the economy lost 651,000 jobs during February, healthcare added 27,000 new positions.
In terms of the construction of new facilities during 2009, healthcare development is expected to fall by five or eight percent. Yet, the drivers that historically have made the healthcare market so strong - obsolescence, new technologies and demographics - are still very much in place.
The collapse of the $330 billion auction rate securities market which let healthcare systems borrow money long term while paying short-term interest rates - cut off a principal source of capital for new development. Hospitals have investment portfolios tied to Wall Street, another source of capital that is being cut off. Endowments are drying up as even the most dependable philanthropists see their fortunes shrink. Access to long-term debt vehicles, such as variable-rate demand bonds backed by letters of credit, is available only to healthcare systems that are A-rated or even better. Even when a provider has superior credit, interest rates to borrow money may be as high as six to 6.5 percent. For some hospitals and healthcare providers, the cost of credit - if they can get it - is too expensive.
To fill the gap, healthcare providers are considering private sources that have the capital necessary to finance projects. The upside of private capital is that it can be committed over the long term to help hospitals and providers fulfill their strategic expansion plans without the same balance sheet implications - something hospitals are focused on in order to maintain a good standing with the ratings agencies.
In a 0 percent federal rate environment when 30-year fixed-rate mortgages have come down to 5.29 percent, capital is competitive with traditional hospital financing, compared with other cycles.
Tags: auction rate securities market, balance sheet, credit, economy, GDP, health care industry, Healthcare, healthcare development, hospitals, interest rates, jobs, mortgages, new technologies, ong-term debt vehicles, philanthropists, private sources, recession, traditional hospital financing, variable-rate demand bonds, Wall Street
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