One of the arguments behind the effort to inject more government into health care is the concern that health care spending is growing too large as a share of GDP.
But is more government really the answer?
Consider, for example, the growth in federal health program outlays as both a share of total federal outlays and a share of GDP.
• In 1965, federal health program outlays registered 2.5 percent of total outlays and 0.5 percent of GDP.
• In 1970, federal health program outlays registered 7.1 percent of total outlays and 1.4 percent of GDP.
• In 1975, federal health program outlays registered 8.9 percent of total outlays and 1.9 percent of GDP.
• In 1980, federal health program outlays registered 11.1 percent of total outlays and 2.4 percent of GDP.
• In 1985, federal health program outlays registered 12.4 percent of total outlays and 2.8 percent of GDP.
• In 1990, federal health program outlays registered 14.4 percent of total outlays and 3.1 percent of GDP.
• In 1995, federal health program outlays registered 20.3 percent of total outlays and 4.2 percent of GDP.
• In 2000, federal health program outlays registered 21.7 percent of total outlays and 4.0 percent of GDP.
• In 2005, federal health program outlays registered 24.8 percent of total outlays and 4.9 percent of GDP.
• In 2009, federal health program outlays registered 24.2 percent of total outlays and 6.0 percent of GDP.
Nothing in these numbers indicates that more government spending and control will do anything to slow the growth in health care spending. Indeed, the case can be made that government – which is devoid of incentives to control spending – only serves to accelerate health care spending.
Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council
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