Predicted to grow at 5.5 percent annually, healthcare spending has consequences for the nation’s economy.
In 2016, healthcare spending was 18 percent of GDP or $3.3 trillion. New predictions for healthcare spending mean such growth will outpace GDP over the same period.
Moody’s Assistant Vice President Rebecca Karnovitz told Health Leaders it’s not clear if initiatives such as population health or value-based care will provide enough savings to bend the cost curve.
Employers are following in the government’s footsteps. We are seeing businesses offering employees plans with high-performance narrow networks with providers that have agreed to provide high-quality care at a reduced price, enabling business to offer plans with lower premiums but with high quality care.
The U.S. spends almost double what other high-income countries spend as a share of their economies, Moody’s said. Households and businesses made up nearly half of the spending. According to the report,
The impact of healthcare costs on household finances and well-being reverberates through the U.S. economy since household consumption accounts for nearly 70 percent of annual economic output. The erosion of households’ purchasing power could weaken the retail goods and services sectors, whereas the impact on households’ debt repayment capacity might affect the large US consumer finance sector.
According to Healthcare Finance, State Medicaid spending is also projected to increase faster than tax revenue over the next decade, and will absorb an even greater share of state resources. As federal aid for Medicaid expansion states winds down, state budgets could also feel the pain.