America’s total annual spending on healthcare hit $2T around 2005 and is now around $3T. In “It’s time to get mad about the outrageous cost of health care” in the Nov. 2014 issue of Consumer Reports, we read that “if our $3 trillion health care sector were its own country, it would be the world’s fifth-largest economy.”
The cost of healthcare in the U.S. as a percentage of the gross domestic product (GDP) was 13.8 percent in 2000 and 16.8 percent in 2008 (chart). So in eight years, spending on healthcare went from being less than one-seventh of the entire economy to being more than one-sixth. Might it become one-fifth?
From 2009 through 2011, healthcare spending leveled off at 17.9 percent of GDP. With “The end of health care’s historic spending slowdown is near” in Sep. 2014, the Washington Post reported (link added):
As the economy recovers, Obamacare expands coverage and baby boomers join Medicare in droves, the federal Centers for Medicare and Medicaid Services’ actuary now projects that health spending will grow on average 5.7 percent each year through 2023, which is 1.1 percentage points greater than the expected rise in GDP over the same period. Health care’s share of GDP over that time will rise from 17.2 percent now to 19.3 percent in 2023, or about $5.2 trillion…
It appears that healthcare will soon be right at one-fifth of the economy. However, those figures are just projections. The economy has been expanding for almost six years, which is a fairly long expansion. If the economy were to slow, the share that healthcare takes up of the economy could be at one-fifth even sooner. (Also, that projected 4.6 percent growth in GDP seems a bit optimistic.)