Impact of Health on the Economy

Our health issues and the problems with our healthcare system are doing a number of things to the economy.  Health problems can impair or completely disable workers, reducing their productivity or removing them from the workforce entirely.  The number of workers on Federal disability has more than doubled in the last two decades, despite a shift away from manual labor (and the workplace injuries that go with it) in the jobs market.  The impact on our productivity from the more than 109 million Americans suffering from chronic diseases costs our economy over $1 trillion annually.  This is a huge drag on overall productivity.  Reducing the incidence of these conditions by just 15% would boost GDP growth by .1% annually.

The massive disconnect between medical costs and medical outcomes, compared to other developed nations, is also a comparative drain on economic growth – medical expenses are a mandatory form of consumption, and having more medical expenses in the economy than necessary means that the money going to pay for them will not be spent on more productive things.  American expenditures on healthcare were $2.57 trillion in 2010, 17.3% of GDP.  We spend much more per capita on health expenses than any other developed nation – $8,233 per person in 2010, 50% more than the next-most-expensive nation, Norway, at $5,388 per person – but we somehow have significantly lower quality medical outcomes than the average developed nation. 

This means we’re wasting more than half of that money on an inefficient medical industry, unnecessary medical care, and many other financial sinkholes.  If we could stop even a third of this spending and redirect the money (more than 5% of GDP!) to more productive pursuits, without reducing medical outcomes, we’d boost GDP growth by roughly .5% per year.  This still wouldn’t put us at the top, in terms of money per capita compared to medical outcomes, so we know that this kind of efficiency is possible – we just have to figure out how to achieve it.

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