Academic journal article Business Economics

Connecting U.S. Health Expenditures with the Health Sector Workforce

Academic journal article Business Economics

Connecting U.S. Health Expenditures with the Health Sector Workforce

Article excerpt

The National Health Expenditure Accounts ( NHEA) produced by the Centers for Medicare and Medicaid Services report that U.S. health care spending was $2.6 trillion in 2010. More recent estimates from Altarum Institute confirm that the health sector represents 17.9 percent of our national output. The data from the Bureau of Labor Statistics show that the health sector continued to create jobs throughout the recession and recovery and now accounts for nearly one in nine jobs. For the first time, we link the workforce by occupation to national spending on health care services by aligning data sets from the BLS and Bureau of Economic Analysis with the NHEA. We find $1 trillion, or 57 percent of the $1.78 trillion spent on personal health care services, went to health sector labor. Characterizing the health sector workforce and its contribution to health expenditures Worms the potential for spending reductions and the implications of such reductions on employment.

Business Economics (2013) 48, 42-57.

Keywords: health sector, employment, health expenditure, occupation

The National Health Expenditure Accounts (NHEA) produced by the Centers for Medicare and Medicaid Services (CMS) report that U.S. health care spending was $2.59 trillion in 2010. More recent estimates (to September 2012) from Altarum Institute's Center for Sustainable Health Spending show national health expenditures (NHE) at $2.84 trillion, and indicate that the health sector comprises 17.9 percent of gross domestic product (GDP). Figure 1 shows health care spending as a percent of GDP and of potential GDP (PGDP), a measure that reduces business cycle effects and provides a clearer picture of where the health spending share of GDP is headed in the longer term [Roehrig 2011].

Figure 2 shows how total health care spending breaks down among major categories, with hospital care having the largest share by far (32 percent), and physician and clinical services accounting for the second biggest slice (19 percent). Surprisingly, given the large amount of attention devoted to it, prescription drugs account for only 10 percent of total national health expenditures.

Figure 2. Health Spending by Category, September 2012

Dental services                   4%

Prescription drugs               10%

Nursing home                      5%

Home health care                  3%

Remaining personal health] care  11%

Other health spending            16%

Hospital care                    32%

Physician & Clinical services    19%

Source: Altarum monthly National Health Expenditure estimates.

Note: Table made from pie chart.

While news reporting seems to stress "skyrocketing" health expenditure growth, Figure 3 tells a different story. Beginning in 2009, official data show the two lowest annual growth rates of health expenditures--hovering near 4 percent--in the 50-plus-year history of the NHEA. Altarum data, shown in Figure 3, suggest this trend has continued into 2012.(1)

The data from the Bureau of Labor Statistics (BLS) in Figure 4 show that the health sector has continued to create jobs throughout the recession and recovery. Since the start of the recession in December 2007, the health sector has added 1.4 million jobs (a cumulative growth of 10.1 percent), while nonhealth employment fell by 5.6 million jobs (a cumulative decline of 4.6 percent).

In 2011, $1.78 trillion of U.S. health expenditures, or about 11 percent of GDP, went to personal health care services received in hospitals, provider offices, nursing homes, and in the home. Correspondingly, as the share of GDP devoted to health care has grown, and the sector has remained a stabilizing force in the labor market during economic downturns (with the Great Recession being a particularly strong example), the share of total employment associated with the delivery of personal health care services has grown to an all-time high of 10.8 percent as of October 2012, as shown in Figure 5. …

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