Venue: The Fuqua School of Business, Duke University, 1 Towerview Drive, Durham, NC 27708-0120

 

Presentation

Engine of Growth Perspective of Rising Health Care Expenditures

Authors: Robert S. Woodward (University of New Hampshire); Timothy F. Page (University of New Hampshire)

Presenter: Robert S. Woodward (University of New Hampshire)

Discussant: Daniel Waldo (Center for Medicare & Medicaid Services)

Session: Health Care Expenditure

Room: Seminar A

When: Monday 8:30 a.m. - 10 a.m.

While rising insurance premiums may be problematic, rising expenditures on health care even as an increasing percent of GDP need not be if health care is an ?engine of growth? for the economy as a whole. This paper briefly compares two types of models predicting GDP and health care expenditures into the future. In the one representing health care as a drag on the economy, the level of health care overtakes the GDP. In another, health care becomes an increasingly important ?engine? of overall economic growth. While we do not propose that either prediction is necessarily more accurate, the existence of the ?engine of growth? alternative does contradict the popular presumption that rising proportions of GDP spent on health care must necessarily be disadvantageous. The paper then explains the access and equity problems that do result when rising expenditures are coupled with increasing income inequalities.

The models of health care as a economic drag include 1) a linear extrapolation of National Healthcare Expenditures (NHE) as a proportion of GDP and 2) a geometric model of NHE as a function of GDP. The model of health care as an engine of economic growth extrapolates the geometric growth in the non-health care aspect of the GDP and predicts NHE as a function of that growth.

The geometric model of health care as a drag has NHE growing larger than GDP in 2086. The model of health care as an engine of growth has GDP growth rate increasing from its historic value of 7.1% between 1960 to 2004, to 8.4% in 2086.