GDP: Health Services Are 29 Percent of Growth

BEAToday’s second release of Q4 GDP showed the production of goods actually shrank in the fourth quarter. As a result, the (annualized) $26 billion growth in health services spending accounted for 29 percent of GDP growth of $88.2 billion. It comprised 31 percent of services spending growth and 35 percent of growth in personal consumption expenditure (Table I). This means that health services spending continues to devour more of our budgets. The evidence continues to indicate Obamacare is not bending the cost curve.

20160226 TI

From 2014 Q4 to 2015 Q4, health services spending grew more moderately, comprising 18 percent of GDP growth, 26 percent of growth in personal consumption expenditure, and 29 percent of services growth (Table II). This is still disproportionately high.

20160226 TII

Technical note: When I discuss health services in these quarterly GDP releases, I mean only health services. I do not include purchases of medical equipment, or facilities construction. While I include Medicare and Medicaid, I do not include Veterans Health Administration or other government benefits. So, these dollar figures undercount the amount of our economy consumed by the government-health complex.

(See: Measuring the Economy: A Primer on the GDP and the National Income and Product Accounts, Bureau of Economic Analysis, October 2014, pages 5-2 and 5-3; Micah B. Hartman, et al., “A Reconciliation of Health Care Expenditures in the National Health Expenditures Accounts and in Gross Domestic Product,” Research Spotlight, Survey of Current Business, September 2010, pages 42-52.)

Comments (2)

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  1. John Fembup says:

    John, I take it your technical note explains why the data you present shows “health services” at 12% of GDP rather than the larger share of 16% – 20% so often cited?