Reading Piketty In DC: Does Income Inequality Squeeze Health Spending?

In the past year, an element of mystery and suspense has crept quietly into the long-running saga of health care spending growth, in most times a dreary tale of predictability and frustration. The Congressional Budget Office (CBO)’s August forecast of significant reductions in Medicare spending growth in the next decade will help stoke a running debate about whether the spending slowdown that has outlasted the 2008-2010 recession is merely a delayed effect of the slump or a symptom of structural changes with a life of their own. The mystery and suspense come from month-to-month uncertainties and inscrutable data about which way the trend lines are bending, and why. Health Spending and Employment A useful slant on the puzzle is offered in an August Health Affairs analysis by Dave Dranove and colleagues that examines small area variations in spending growth and correlates them with employment data. Dranove et al. found that relatively higher health spending occurred where employment levels were relatively high, and high unemployment translated into less spending on health. So whether it’s copays, deductibles, insurance contributions, or some other cost associated with obtaining care, personal income is a factor in spending levels, just as health costs are a factor in personal income. The lingering slowdown is thus attributable to a mixed recovery, in which employment has lagged behind improved stock market values and gross domestic product (GDP). Don’t bet on structural c...
Source: Health Affairs Blog - Category: Health Management Authors: Tags: All Categories Health Care Costs Health Reform Spending Source Type: blogs