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If Unchecked, Health Care Spending Will Eat Up Income Gains, Study Says

Health care spending will absorb any increase to household income and further erode paychecks starting in 2050, according to an analysis of U.S. economic growth.

September 10, 2009
Related Topics: Medical Benefits Law, Benefit Design and Communication, Latest News
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Health care spending will absorb any increase to household income and further erode paychecks starting in 2050, according to an analysis of U.S. economic growth published in the journal Health Affairs.

In a follow-up to forecasts published in 2003, economists from Harvard University and the University of Michigan calculated that 153.5 percent of any income growth will be spent on health care between 2050 and 2083, should spending outpace the economy by 2 percentage points per year.

In the eight years that ended in 2007, health care grew 2.2 percentage points faster than the gross domestic product, or roughly one-third of any income gains, the authors note.

Should health care spending slow to 1 percentage point faster than the GDP, 63.4 percent of income gains will be spent on health care between 2050 and 2083.

Under the projections, the overall share of income increases that will be spent on health care between 2007 and 2083 would be 118.5 percent and 53.6 percent for health care growth in excess of GDP of 2 percentage points and 1 percentage point, respectively.


Filed by Melanie Evans of Modern Healthcare, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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