NCPA - National Center for Policy Analysis

Feeling Poorer? Health Care Bears Some Blame

August 17, 2011

Over 57 years starting in 1950 -- that is, excluding the most recent economic downturn -- household net worth increased at an annual rate of 7.5 percent, compared to an annual increase of 7.0 percent in gross domestic product (GDP).  However, after adjusting for inflation and population growth these growth rates decline to 2.6 percent annually for household net worth and 2.1 percent for GDP.  These growth rates imply that on a per person basis, real wealth doubles every 27 years while real GDP doubles every 33 years, says Christopher J. Conover, a research scholar at Duke University's Center for Health Policy and Inequalities Research.

  • Real per capita health spending grew 4.5 percent annually over the same period, which was 72 percent faster than the growth rate of net household wealth.
  • This rapid pace implies a doubling of real per person spending (in general purchasing power terms, not medical dollars) every 16 years.

Health spending does not put us in danger of eradicating national wealth, but it could be viewed as steadily chipping away at it, decade after decade.  However, less rapid increases in health spending might have allowed for more rapid gains in household wealth. 

  • Imagine, for example, if Americans had been able to annually add to their net wealth the difference between what we actually spent on health care per $100 of wealth and what we spent per $100 in 1950.
  • Just this additional amount of wealth, accumulated through 2010, would have increased total household net wealth to nearly $80 trillion by 2010 -- nearly $25 trillion more than the actual total for that year.

Source: Christopher J. Conover, "Feeling Poorer?  Health Care Bears Some Blame," The American, August 11, 2011.

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