If you read the recent TIME article “Bitter Pill: Why Medical Bills Are Killing Us“, you’re probably thinking that our nation’s economic viability is doomed if health care spending continues to grow at it’s current pace. As so ominously mentioned in the article, “we may be shocked at the $60 billion price tag for cleaning up after Hurricane Sandy” and yet we spent almost that much last week on health care. It is true that in 2010, the United States spent 17.6% of GDP on healthcare, amounting to over $8,233 per person (as a comparison, Norway was the next highest spender at $5,388 per capita and the Netherlands which spent 12% of GDP on health care).
I have far more to say about the TIME article (so stay tuned for future blog posts) and about how much we spend on health care in this country. Clearly the $8,233 spent per person is not giving us the health outcomes we deserve (life expectancy, infant mortality, maternal mortality, etc.) But many people forget that our country’s economic viability hasn’t been destroyed by healthcare, but has been rather dependent on it for years.
Economist Uwe Reinhardt has written on this subject in the past (see “In Defense of a Giant and Growing Healthcare Industry“), but Reinhardt’s most recent article in the NYTimes Economix blog points out that in the past two decades, the healthcare industry has created more net jobs than any other industry. Healthcare was one of the few industries to add jobs during the “Great Recession”. Healthcare spending hasn’t beaten our economy down; in fact, the healthcare industry has been leading our economy forward. And that spending, according to Reinhardt’s analysis (I’m not an economist, so I’m not going to even pretend to know if he’s right or wrong) has been rather consistent over time.
With all the talk about how much we spend on health and healthcare, we forget to mention the thousands of jobs that the industry employs. In most towns and cities across the country, it is the hospital that is the dominant employer. Additionally, the health care industry employs people in jobs across the spectrum, from doctors and nurses to technicians and housekeeping staff. Reinhardt pointedly asks,
When you last visited a physician’s practice or stayed in a hospital, did you see people other than patients there? Do you realize that these people call their work “jobs,” which yield a livelihood that supports a family and raises the next generation of Earthlings? Did it occur to you that their care for you has economic value, especially as you can walk again as you could not before they cared for you? Did you consider that they postponed your death by many years, perhaps even decades? Would you really surmise that their work creates less value added than, say, the fast-food industry? Note, of course, that the latter is a major driver of obesity in America — and thus of diabetes and the many illnesses that diabetes triggers, such as blindness, kidney failure, loss of limb or even early death, the very things the American health care sector fights.
Is there waste in the system? Absolutely, just as there is waste in every other major US industry. You could even argue that the fast-food industry is perhaps the most wasteful, by taxing the nation’s future health. But the mere existence of waste in the US healthcare system does not negate the value the industry has had for our economy.