Healthcare And The US Economy: What You Need To Know

We all know that healthcare makes up a large component of our nation’s GDP, or Gross Domestic Product, but exactly how much is it and what changes have we seen from last year’s report? Well, GDP is obviously a closely watched measurement of our overall economy, and jumping into the calculations gets pretty intricate so we will stick somewhat to the basics of the Healthcare numbers. Healthcare costs have moved swiftly into the limelight of the recent Presidential election, and more specifically now into the hands of President-elect Barack Obama. Rising healthcare costs, the countless uninsured, and comparisons to other countries’ low-cost healthcare coverage will remain in the spotlight for years to come. It will be extremely difficult to have a complete overhaul of our healthcare system, but I imagine different legislation will pass through and hopefully give some relief to a very large problem within the United States economy. Why don’t we have a look at the most recent numbers to come out.

Healthcare and GDP

Unfortunately it may seem like I am presenting old numbers; however, the lag for economic data is fairly long so the problem at hand may be getting significantly worse. We may not fully realize the negative effect for quite some time. The nation’s healthcare spending in 2007 expanded more rapidly than the overall economy again, accounting for 16.2% of GDP, an increase from the 2006 number of 16%. The total price tag grew 6.1% to $2.2 trillion, or $7,421 per person. This number is slightly down from the 6.7% growth the United States experienced in 2006 according to a recent study. In addition, national healthcare spending in 2007 increased at its slowest rate since 1998. One important fact to note is that prescription-drug spending slowed to its lowest rate in 45 years. It climbed only 4.9% compared to an 8.6% increase a year earlier. The many articles I have written about the struggles pharmaceutical companies have faced led to this slowdown.

The inability to expand its pipeline and make-up for its patent losses on blockbuster drugs has revitalized the generic sector and will lead to higher revenues from this sector in years to come as they offer effective lower-cost drugs. Another key concern leading to the slowdown of prescription drug spending has been the ever-so merciless Food and Drug Administration (FDA), which has consequently increased the number of “black box” safety warnings on drugs.

In my opinion, the FDA needs to be restructured as they are struggling to keep up with the rampant drug applications flooding their system. This especially holds true with the talks of biogenerics, or generic forms of biotech drugs. In the United States this will help Americans who struggle to pay for their healthcare costs, but will only lead to further exhaustion of the already understaffed FDA.

Healthcare and Obama?

It’s easy to say that President-elect Obama has way too much on his plate coming into office, and only time will tell what exactly his focus is towards and where funding ends up. With the ongoing recession and war remaining in focus for months, if not years to come, will our nation’s healthcare problem ever be solved? Personally, I do not think we can fix the entire healthcare system like the TARP plan was put in place to fix our financial crisis. But is that plan really working? Well let’s push that deep question to a never-ending novel to come later. An early victory may have come for President-elect Obama regarding children’s healthcare. A vote may come soon on renewing a health insurance program for children which expires on March 31st. The State Children’s Health Insurance Program, SCHIP, provides health insurance for children in families that do not qualify for Medicaid because they earn too much but not enough to afford private insurance coverage.

Numbers show that 6 million children are currently enrolled and depending on the funding for the bill, enrollment may increase to about 10 million. It is difficult to say what exactly President-elect Obama has planned next, but we do know it will be a long process to fix the issues that surround Medicare, Medicaid, and the rising uninsured.

For one, I do feel the issue concerning the FDA should be fixed immediately and not pushed to the back-burner. Expect legislation to push for more generic usage, funding to small businesses for health insurance coverage (small businesses simply cannot keep up with the rising healthcare costs), and an attempt to mandate healthcare for all employers to provide coverage. The latter will be the most troubling and will have a very long, drawn-out process that will no doubt be interesting to watch unfold.

Disclosure: None.

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